Intel Corp. Israeli self-driving cars and advanced driver-assistance systems (ADAS) unit Mobileye Global Inc. (Nasdaq: MBLY) had a dream debut on Wall Street yesterday. On its first day of trading, the share price rose 38% to $28.97, giving a market cap of $23.068 billion.
The flotation returned Mobileye to Wall Street after 5.5 years as a private company owned by Intel. The IPO was the largest of any company on Wall Street this year and makes it the most valuable Israeli company, easily overtaking Check Point Software Technologies (Nasdaq: CHKP), which is worth $14.6 billion.
Despite yesterday's strong performance by Mobileye, it should be remembered that the company originally planned last year to hold the IPO at a company valuation of $50 billion, after Intel acquired it in 2017 for $15.2 billion. But the dire situation on the markets this year forced Intel to slash Mobileye's valuation, and on Wednesday the flotation was held at a company valuation of just below $17 billion. Mobileye perhaps aimed lower in the hope that the low value would tempt investors and create a momentum of demand that lifts the company's market cap.
Mobileye issued 41 million new shares and raised $861 million at $21 per share. If the share price keeps rising, it is reasonable to assume that the underwriters will exercise their options to buy more shares at the flotation price and Mobileye will raise an additional $129 million. Mobileye also raised an additional $100 million from General Atlantic. After the flotation, Intel holds 94% of Mobileye's shares. Mobileye founder and CEO Prof. Amnon Shashua told journalists that in the future Intel will sell more shares. During the IPO Intel did not offer any shares but as part of the process, it will receive $3.5 billion from Mobileye, as a kind of dividend.
Shahua said, "I assume there will be more liquidity in the future. If Intel wants to sell (Mobileye) that's its business but it's a long process. For us an opportunity has now been created to be in the public eye and to build value and we already began to build value at the opening of trade today. There is very strong interest from investors, and we met hundreds of investors and they all told us how much this is a special company and there are not more companies like this."
What really drew us to the IPO was the desire to be in the public eye"
Shashua stresses the fact that Mobileye now has its own 'currency' (its own shares rather than Intel's). "It's good but it was not the main reason for the flotation. Mobileye has never had a problem attracting good employees that connect to the aims of the company. Now that we have our own currency it is better but what really drew us to the IPO was the desire to be in the public eye, and connect through the media, and through the analysts on everything that we have been doing under the radar over the past five years. Therefore, the state of the markets did not deter us. We will begin to build value."
Shashua adds that from his point of view it makes no difference if the public's holding is 6% or 20% or 30% because he feels that Mobileye is a public company and even over the years that it has been fully owned by Intel, it has been managed independently. However, he admits that the float, (the volume of shares being traded) is very small, "and that is not healthy over time if there are not enough shares on the market." But as he previously stated, Shashua believes that over time there will be more shares in public hands, although he expects Intel to retain a controlling stake for a long time to come.
When asked if the autonomous vehicle market is developing at a satisfactory pace, Shashua said yes, but emphasized that there are nuances. "People think of a 'robot-taxi', a kind of Uber without a driver - that's the top end, and we do that too. But we have also built a spectrum of solutions and begun providing them. It starts with a system that is just cameras, we have provided 50,000 of them to China and we have six more carmakers in the near term and there is a strong desire in the industry to adopt."
Shashua explains that Mobileye produces "modularity of autonomy" - one sensor can be added that will allow an autonomous system to be given to only one lane; If you add a corner radar to it, you add the option to change lanes and more, and "Once we have finished everything, we have an autonomous vehicle that is able to drive anywhere. At the same time, we are launching our robot taxi."
Shashua was asked if there will be a delay in the launch of the company's autonomous taxis, and he replied that there is no technological delay - "Our autonomous vehicles, with a driver for security, are already active." He added "The past five years have given us a richer view of solutions and they generate revenue for us. I have to be responsible for profit and loss and I have to make sure that the company is profitable. I look at competitors who burn billions and don't make money, and I don't want to be there. We are building it right. Mobileye since 2014 has always been profitable and I want to keep it that way."
Published by Globes, Israel business news - en.globes.co.il - on October 27, 2022.
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