Mobileye surges to 36% in best launch of the year for major US IPO

(Bloomberg) – Mobileye Global Inc., the self-driving car technology company run by Intel Corp. spinoff, rallied as much as 36% in initial trading after raising $861 million in one of the few US initial public offerings to surpass its target. This year.

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The first-day gain to date, while insignificant by standards in previous boom years, ranks as the largest gain in a major US listing this year.

Shares of Mobileye, which opened for trading in New York Wednesday at $26.71 per share, rose to $28.49 after selling for $21 in its IPO. They were up 28% to $26.80 at 1:31 p.m. New York time, giving the company a market value of about $22 billion.

The company sold 41 million shares on Tuesday after marketing them for $18 to $20, making it only the fourth company out of 199 shares in the US this year to have an IPO price above the range. micro-targets, according to Bloomberg data.

Although Mobileye’s market value topped the $15.3 billion Intel paid Mobileye in 2017, it’s still well below the $30 billion valuation the company had previously sought, Bloomberg News reported. Along with the listing, General Atlantic agreed to buy $100 million worth of stock in a private placement, according to Mobileye’s filing with the U.S. Securities and Exchange Commission.

Last year, record-high IPO volumes in the US and around the world fell amid market volatility, inflation concerns and geopolitical risks, as well as the underperformance of listed companies. listed shares in 2021, down 22% from the weighted average. communication.

‘Expanding opportunity’

Mandeep Singh, senior analyst at Bloomberg Intelligence, said: “Mobileye’s initial IPO confirms investors’ interest in Mobileye’s growth prospects in the market for advanced driver assistance systems. advance (ADAS). “We believe that similar to the growth of chips in smartphones, the growing demand for computer vision and ADAS systems in cars could represent a multi-year expansion opportunity for semiconductors. guide.”

Singh said the success of the Mobileye listing stems from a proven business model and steady growth expectations. “However, it will be difficult for unprofitable companies to be listed on this market,” he said.

The number of IPOs in the US has plummeted to about $23 billion since January 1, compared with $279 billion at this point in 2021, the data shows.

Just two 2022 listings on US exchanges topped $1 billion. Corebridge Financial Inc. raised $1.68 billion in September, while the January listing of private equity firm TPG Inc. brought in $1.1 billion. Last year, 45 companies raised $1 billion or more in IPOs on the New York Stock Exchange and Nasdaq, the data showed.

Waiting for Instacart

Mobileye’s offering is the fourth-largest in the US and could be the last major IPO of the year unless a surprise competitor quickly moves to list. Instacart Inc., another highly anticipated listing, decided against an IPO this year after cutting its valuation for the third time, to $13 billion, Bloomberg News reported this month.

Mobileye has had a strong start to a tough year for its semiconductor peers. The Philadelphia Stock Exchange Semiconductor Index has lost 40% of its value this year. But even in the process, due to rapidly falling demand in end markets such as personal computers and smartphones, orders for auto-related chips remained flat and scarcity persisted. continue.

Amnon Shashua co-founded Mobileye in 1999 and helped the company go public in the US in 2014. He has been its chief executive officer since 2017.

In a letter to shareholders included in the prospectus, Shashua said the company’s driver-assist technology has been used in more than 125 million vehicles. He said he expects the technology to be deployed on another 270 million vehicles by 2030.

“While the core of our business today is to make human-driven cars safer, we are working tirelessly to deliver a better future,” said Shashua. hybrid of self-driving cars.

Mobileye said it will use the money raised towards net proceeds for working capital and general corporate purposes, as well as paying off part of Intel’s debt. As of July, it had $774 million in cash and cash equivalents. For the 12 months ended December 25, it posted a net loss of $75 million on revenue of $1.39 billion, according to its filing.

Intel CEO Pat Gelsinger is looking to capitalize on the Israel-based business, which makes chips for cameras and driver-assistance features, and is seen as a valuable asset as the industry The auto industry is racing to fully autonomous vehicles. But the bright future for self-driving vehicles prophesied by Intel, Waymo and others has fallen apart. A world filled with robot taxis seems only decades away, and the damage to investors who put their faith in the sector is mounting.

Intel Control

In the filing, Intel said it would continue to hold all of Mobileye’s Class B shares, which would give it control of the company with 99.4% of the voting rights.

Shashua said it is interested in buying up to $10 million in shares of Class A common stock, according to the filing. Baillie Gifford and Norges Bank Investment Management, as background investors, have indicated interest in buying a total of $330 million in shares.

The Mobileye offering by Goldman Sachs Group Inc. and Morgan Stanley in the lead. The other 23 underwriters listed on its filing include Evercore Inc., Barclays Plc, Citigroup Inc. and Bank of America Corp.

The company’s stock is trading on Nasdaq under the symbol MBLY, the same ticker it used when it first listed in 2014.

(Updated with return on equity in third paragraph.)

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