Mobileye Stocks Close on Rise in Equity Market

Intel Corp.’s

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The auto-driving unit closed at $28.97, above its initial IPO price of $21 per share, giving Mobileye a valuation of approximately $23 billion. The stock opened just before mid-day Wednesday on the Nasdaq and traded under the symbol MBLY.

Shares were trading late Tuesday at a price above the targeted range of $18 to $20 per share, although they had fallen significantly before the offer. Mobileye advisors were all too aware of the dangers facing U.S. IPOs, given how volatile markets have been this year and conservatively pricing the offer, according to people close to the deal. They also adjusted the bid by selling fewer shares than planned – representing about 5% to 6% of what would ultimately be outstanding.

The IPO market is having its worst year in two decades, forcing some companies to drop their valuations by nearly 80% and seek funding in private markets. The WSJ explains why the IPO market is frozen and what it takes to thaw it. Photo Illustration: Ryan Trefes

According to Dealogic, U.S. IPOs have raised $7.4 billion by Tuesday this year, marking 2022 as the worst year for new issues in decades.

Still, Intel and the insurers overseeing the deal were now determined to move forward with what was expected to be the last major listing of the year. Intel Chief Executive Officer Pat Gelsinger said the chipmaker doesn’t need the money — more than $800 million — from the offer and that listing Mobileye will give the self-driving car unit a higher profile and attract more business.

Founded in 1999 by Amnon Shashua, Mobileye has developed technology that helps warn drivers of potential collisions with other cars or pedestrians. It first entered the stock market with a valuation of nearly $5 billion in its 2014 IPO, making Mobileye the largest Israeli company to go public at the time. Three years later, Intel bought the loss-making company for approximately $15 billion. When The Wall Street Journal first reported late last year that Intel would sell Mobileye in an IPO, the self-driving car unit was expected to be valued at over $50 billion.

“Being in the public eye creates attention,” said Mr. The company’s CEO, Shashua, added that valuation at the time of the offer was “on the side of the matter” as very few shares were sold in the IPO.

The lower-than-expected valuation is the latest example of negative views on advanced vehicle technology.

Just a few years ago, the industry promised that the proliferation of self-driving cars was just around the corner, sparking an arms race between companies that didn’t want to be left behind. general engines partner.

$1 billion deal to buy self-driving car startup Cruise repeated with deals at Ford Motor partner.

F -0.08%

and expenses incurred by ride-hailing giants Uber Technologies Inch.

UBER -0.56%

and Lyft Inch.

TO PICK UP -0.34%

Lyft co-founder John Zimmer predicted in 2016 that self-driving cars would make up most of their journeys in five years, and that by 2025, personal vehicle ownership in major US cities would end entirely.

Daniel Morgan, a senior portfolio manager focusing on technology at Synovus Trust Co., is skeptical of a standalone Mobileye, especially when it comes to competing with deeper-pocketed competitors like Google-parent Alphabet. Inc.’s

Waymo and Amazon.com Inc.’s

zoox.

“The market has recently underestimated tech companies with unproven business models that may not be profitable,” he said. “How does it generate enough sales for mobile to come out of the red?”

In 2021, Mobileye recorded roughly $1.4 billion in revenue, up more than 40% year-on-year, according to regulatory filings.

Mr. Shashua predicted revenue growth of about 30% “for a few years”.

Intel’s Mr. Gelsinger sounded optimistic this week, saying automakers are aiming to deploy partially automated or self-driving vehicles by the middle of the decade, and the technology will be “pretty mainstream” by then.

“They’re designing these tools today,” he said during the Journal’s annual Tech Live conference.

On Monday, Lyft’s Mr. Zimmer remained optimistic about AVs, even with the timeline closed.

“The important thing is not whether this technology will come to market, but when it will come,” he said.

summer Corrie Driebusch at corrie.driebusch@wsj.com and Tim Higgins at Tim.Higgins@WSJ.com

Corrections and Amplifications
Mobileye Global CEO Amnon Shashua and Intel CEO Pat Gelsinger met in New York’s Times Square on Wednesday. A previous version of this article said they were in Time Square by mistake in a photo caption. (Fixed on October 26, 2022)

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