Intel Autonomous Driving Unit Mobileye $861 million IPO Prices Above Range

Mobileye Global, Intel’s self-driving vehicle technology business raised $861 million by offering 41 million shares at $21, above the range of $18 to $20. The IPO terms were announced last Tuesday and priced last night, a week later. INTC was sold off briskly on the news as the number was far below expectations of the $30 billion figure Intel had flouted about a month ago. The company is only floating 5% of its basic shares outstanding, well below the typical 15%, in light of current market conditions and market reaction. It plans to list on the Nasdaq under the symbol MBLY.

Updated: Mobileye priced US IPO above the range at $21

Mobileye Global raised $861 million by offering 41 million shares at $21, above the range of $18 to $20. Cornerstone investors had indicated on $340 million of the offering (39% of the deal). General Atlantic agreed to buy an additional $100 million worth of shares in a concurrent private placement.

Mobileye is the year’s only $25+ million IPO to price above the range. While it is the year’s largest IPO by market cap at listing, Mobileye is only the year’s third-largest IPO by deal size, due to its relatively small float of about 5% of shares outstanding.

An amount of 44% of the deal is already earmarked to be taken up. Certain cornerstone investors and CEO Amnon Shashua intend to purchase an aggregate $340 million worth of shares in the offering (44% of the deal). Mobileye also plans to raise $100 million in a concurrent private placement to General Atlantic.

The Mobileye is around the same valuation that Intel paid when it bought the company in March 2017.  The IPO market has been in rude health this year, the projection for MBLY’s valuation was at about $50 billion in late 2021. This downward spiral for MBLY has created yet another millstone for Intel’s stock, already crushed by the severe deterioration in the PC/laptop market and the associated plunge in demand for chips.

Bookrunners

Goldman Sachs, Morgan Stanley, Evercore ISI, Barclays, Citi, BofA Securities, RBC Capital Markets, Mizuho Securities, WR Securities, Nomura Securities, and BNP Paribas are the joint bookrunners on the deal.

Profitability

MBLY’s business is already profitable on an adjusted basis. In the IPO prospectus, MBLY provided preliminary Q3 results, estimating revenue of $450 mln (+38%), adjusted gross margin of 73-74%, and adjusted operating income of $139-$143 mln (+11% at midpoint).

MBLY booked $1.5 billion in revenue for the 12 months ended July 2, 2022. For the six months ended July 2, 2022, MBLY’s revenue increased by 21% to $854 mln as its ADAS platform gains traction with an increasing number of auto manufacturers. Based on MBLY’s annualized revenue of roughly $1.75 bln for FY22, and its projected $16 bln valuation, the P/S is around 9.1x. Assuming revenue growth of 20% for FY23, MBLY’s forward P/S drops to about 7.6x.

As of October 1, 2022, MBLY’s products had been installed in about 800 vehicle models while its System-on-Chips had been deployed in over 125 mln vehicles.

About Mobileye

Mobileye Global is a Jerusalem, Israel-based company and was founded in 1999. Mobileye believes that it has pioneered advanced driver assistance systems (ADAS) technology, continuously expanding the scope of its ADAS offerings while leading the evolution to autonomous driving solutions. 

The company’s portfolio of solutions is built upon a comprehensive suite of purpose-built software and hardware technologies and include its family of EyeQ System-on-Chips (SoCs), which were first launched in 2007. In the 9mo22, Mobileye shipped approximately 24.0 million of its SoCs (+13% y/y).

It currently ships a variety of ADAS solutions to 13 of the 15 largest automakers in the world, as well as many smaller OEMs. As of October 1, 2022, the company’s solutions had been installed in approximately 800 vehicle models, and its SoCs had been deployed in over 125 million vehicles.

Last year, MBLY announced over 40 design wins with major auto OEMs. That design win momentum has continued throughout 2022, leading MBLY to believe that its solutions will be embedded into more than an additional 270 mln vehicles by 2030.

From the TradersCommunity Research Desk