Mobileye IPO benefits from some driver assistance

Reuters
Reuters

NEW YORK (Reuters Breakingviews) – There’s nothing quite like setting low expectations. Doing so helped Mobileye price its shares a bit above their indicated range, at $21 apiece, and spark a 38% jump in their market debut on Wednesday. The maker of components for driver-assistance systems, its parent company Intel and two dozen underwriters slashed the original valuation target from $50 billion down to about the same $15 billion the chipmaker originally paid to buy the company five years ago.

After a long drought in initial public offerings, Mobileye’s deal provides a glimmer of hope for new stock sales. It’s unlikely to clear the way for many more, however, at least not anytime soon. Although Mobileye is unprofitable, its top line grew 41% in the three months ending July 2 compared to approximately the same stretch a year earlier. Autonomous driving also is further away than many in the industry predicted, but vision technology nevertheless remains essential for carmakers. Many other startups lack the same promise.

Only stronger companies manage to go public at all amid volatile markets and shaky economic conditions. Even so, Intel’s bad timing and clear-eyed view on investors cost it a wad of cash it could use. And despite briefly cracking open the IPO market, the deal failed to win Intel any additional credit. Its shares dipped slightly on the day. (By Jeffrey Goldfarb)

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(Editing by Lauren Silva Laughlin and Sharon Lam)

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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