Last year, Intel announced that it will issue the Mobileye IPO in 2022 and make it a separate division. But with high inflation and a volatile market, 2022 has turned out to be one of the worst times in history to make a public offering. Initially, Intel had plans to raise around $3.5 billion from the Mobileye IPO and retain control of the company.
Investors view Intel’s Mobileye as a high-quality company as it has been making superior driver-assist systems and advanced driving technologies for the past few years. The Israel-based company was bought by Intel in 2017.
Mobileye IPO and Valuation
Mobileye powers advanced driver-assist systems using cameras, computer chips, and software. As of 2021, Mobileye’s revenue stood at $1.39 billion.
Intel acquired Mobileye in 2017 for $15.3 billion. Initially, the Mobileye valuation was in the vicinity of $50 billion, but now, according to people familiar with the matter, Intel has reduced its target to less than $20 billion.
The company is also planning to reduce the number of shares it will offer. Experts suggest that the company strategy might be to offer fewer shares at a lower price to attract quality investors, which will increase the price after the public offering.
Intel filed for the Mobileye IPO in September. On October 18, in a public filing, the company said that Intel’s Mobileye IPO shares are expected to be priced between $18 and $20 per Mobileye share. It is one of the most awaited upcoming IPOs of 2022.
Intel’s Mobileye Plans
According to Intel CEO Pat Gelsinger, the company has plans to retain control of Mobileye by holding on to Class B shares. Class B stock has almost 10 times the voting power of Class A stocks.
Mobileye will list its Class A stock on the Nasdaq Global Select Market. If the company’s public offering lists for the maximum price of $20 a piece, it will raise Mobileye valuation to $15.9 billion, as there will be 796.26 million shares outstanding.
Although there is no confirmation on the Mobileye IPO date, sources mention that the company CEO is willing to wait until markets stabilize. While Intel’s revenue is down 14% year-to-date as of July 2022, Mobileye’s revenue is up 21% year-on-year.
The Israel-based firm currently has partnerships with over 50 companies, including Audi, BMW, and Volkswagen.
Market Watch and Risks
The US IPO market is facing one of its worst years on record as economic instability shaves off market value from promising companies. Companies have been forced to reduce valuations, seek private investment, and implement layoffs to reduce costs as an unforgiving market wreaks havoc. It is also worth noting that companies that made their debut in the last two years are mostly trading for less than their IPO price.
The Mobileye shares will be traded on Nasdaq, and the Nasdaq Composite is down by more than 30% this year. The company is betting big on the automated driving market, while the industry has been rife with accidents and regulatory problems.
The low Mobileye valuation is also a sign that investors are being cautious as a potential recession looms over the horizon.
Over five deaths and six injuries have been reported in cases related to automated vehicles, between June 2021 and May 2022. Meanwhile, the global autonomous cars market is projected to grow from $1.64 billion in 2021 to $11.03 billion in 2028 at a CAGR of 31.3%.
In California, Nuro, an autonomous delivery company, received permission to operate its vehicles on public roads. In Florida, the Mayo Clinic used autonomous cars to deliver Covid-19 tests. Mobileye is well-known for building hardware and software for self-driving cars, and providing advanced safety features for over 800 models of vehicles.
“As autonomous driving technology advances, a number of new transportation use cases are expected to emerge around the type of vehicle ownership, what is transported, and where and when the vehicle can operate,” the prospectus reads.
Goldman Sachs and Morgan Stanley are leading the public offering.
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