Autonomous vehicles are widely seen as the next frontier in the motor vehicle industry. Intel subsidiary Mobileye is a current leader in Advanced Driver Assistance Systems (ADAS) that is well-positioned to benefit from this trend. Intel recently filed a confidential registration statement in preparation for a Mobileye IPO, leaving many investors wondering how to buy Mobileye stock.
Mobileye filed its draft registration statement with the SEC on March 7, 2022, and on April 15 news broke that Goldman Sachs and Morgan Stanley would lead the IPO. The IPO could value the Company at over $50 billion, though market conditions will determine the valuation, size, and timing of the offering.
Mobileye is a somewhat unusual IPO. Most IPOs involve venture capital-backed privately held companies. Mobileye is a spinoff of a division of a public company, Intel. That means we have more information on the company, as its operating results are included in Intel’s reports, but it also may make it harder to buy shares on pre-IPO marketplaces.
Let’s take a closer look at Mobileye, and at some ways for investors to buy Mobileye stock.
What is Mobileye
|Mobileye: Fast Facts|
|Industry||Driver Assistance Systems/Autonomous Driving|
|Key Products||EyeQ System-on-Chip|
|Founder and CEO||Amnon Shashua|
|IPO Date||October 25, 2022|
|Market Cap||$23.068 billion|
Mobileye is a world leader in Advanced Driver Assistance (ADAS) systems. ADAS includes technology used in autonomous self-driving vehicles and many other systems currently used to assist drivers in non-autonomous vehicles.
Mobileye products include the entire suite of systems required for ADAS systems, including computing platforms, computer vision, machine learning-based sensing, mapping and localization, driving policy, and active sensors.
Mobileye systems are currently being used in vehicles from some of the largest automakers in the world, including Toyota, VW, BMW, Nissan, Honda, and France’s PSA Group (Peugeot, Citroen, Opel, and others).
Mobileye has several product lines.
- The EyeQ System-on-Chip is the core computing building block for autonomous vehicles, integrating multiple system inputs and outputs. It provides automatic emergency braking, adaptive cruise control, lane-keeping assist, collision warning, and many other systems.
- REM Mapping Technology compiles crowdsourced mapping information from other EyeQ-equipped vehicles and generates adaptive cruise control, lane choice, hands-free driving, and real-time alerts.
- The Responsibility-Sensitive Safety (RSS) model is a formal model for autonomous vehicle safety, using induction and analytical calculations to maximize safety decisions.
- True Redundancy integrates inputs from full-surround cameras with radar and LIDAR (light detection and ranging) inputs to gain the benefits of multiple independent sensing systems.
- The Mobileye Drive autonomous cargo vehicle and Robotaxi autonomous commercial vehicle are exploring a new vehicle-as-a-service business model.
Mobileye was founded in 1999 by Amnon Shashua, a professor at Hebrew University in Israel. The company is currently based in Israel. Mobileye went public in 2014 in the largest IPO ever by an Israeli firm at that time. It was subsequently acquired by Intel for $15 billion in 2017.
Mobileye is already generating substantial sales from existing driver assistance systems integrated into many currently available vehicles. The Company stands to benefit from the increasing adoption of autonomous driving systems but does not depend on the adoption of those systems.
When Will Mobileye Hold its IPO?
Intel confidentially filed a draft registration statement for a public Mobileye offering on March 7, 2022. On April 14 they announced that Goldman Sachs and Morgan Stanley were leading preparations for a public offering.
The IPO will involve newly issued stock. Intel will retain its Mobileye stock and remain the majority owner of Mobileye.
The Mobileye IPO is generating buzz for several reasons. The offering is highly anticipated in its own right, and some analysts see it as a catalyst that could break the IPO market out of its current flat spot. With high-profile debuts like Databricks, Chime, and Instacart all waiting for signs of a more receptive market, a successful IPO for Mobileye could inspire others to take the plunge.
No date has been set for the Mobileye IPO. The draft registration statement filed with the SEC remains confidential, and will not be released until it achieves SEC approval. There is no sure date for a Mobileye IPO but many observers expect it as early as mid-2022, depending (as always) on market conditions.
Current reports suggest that Mobileye’s estimated value is approximately $50 billion.
What Do We Know About Mobileye’s Fundamentals?
The draft registration statement that Intel filed for Mobileye’s IPO remains confidential, and will not be public until it is approved by the SEC. That means that there are things we don’t know about the offering.
We do have more information on Mobileye than we would normally have on an IPO candidate that does not yet have a public registration statement. Because Mobileye is a subsidiary of Intel, its results are included in Intel’s annual reports.
Looking at the discussion of Mobileye in Intel’s latest annual report, we see steady increases in revenue, with an expected pandemic-driven flat period in 2020, and we see that Mobileye is profitable, unusual in a tech IPO.
With revenue at $1.4 billion in 2021 and income at $0.5 billion, we can calculate a margin of roughly 35.7%, again an impressive figure for a tech company preparing for an IPO in an industry where many companies remain largely speculative.
Intel’s report also records key developments in 2021.
- Record revenues and earnings.
- 42% increase in EyeQ System-onChip shipments, to 28 million.
- 100 million total EyeQ chips shipped.
- 41 new Advanced Driver Assistance Systems deals, for a total of 71 production programs across 30 OEMs.
- Unveiling of the Mobileye Robotaxi, a fully self-driving commercial vehicle. Robotaxi deployment is scheduled in Germany and Israel.
Mobileye enjoys a dominant position in a fast-growing market. Some analysts see the market for ADAS systems and autonomous vehicles maintaining an exceptional 11.9% CAGR through 2030.
The immediate takeaway from this is that relative to most tech IPOs, particularly those in future-focused businesses like autonomous vehicles, Mobileye is a mature company with an established, profitable, growing business. That’s one of the reasons why investors are wondering how to buy Mobileye stock.
In September 2022 Mobileye revealed that Q2 2022 sales came in at $460 million, 41% up from the equivalent quarter a year ago and that operating income rose 43% to $190 million.
How to Buy Mobileye Stock
Mobileye is currently a subsidiary of Intel. Its stock does not trade on any public exchange. Purchase through a conventional broker will not be possible until the Company holds a public listing.
There are still options for those who wish to purchase Mobileye shares. You may be able to buy through pre-IPO marketplaces. If shares are unavailable on pre-IPO marketplaces you may consider buying at the IPO, buying after the IPO, or getting Mobileye exposure by buying Intel shares.
Pre-IPO Secondary Markets
These marketplaces buy shares from early investors or from employees who have received stock options as part of their compensation. They then resell the shares to pre-IPO investors.
These marketplaces often impose investor qualifications. There is no guarantee or assurance that they will have available shares in any given pre-IPO company.
- Forge Global merged with Sharespost in 2020, creating a company that is now the world’s largest marketplace for private company shares. There is a minimum purchase of $100,000 worth of shares. Some companies may impose higher minimums, and some may impose requirements for investors to qualify.
- EquityZen acquires shares from employees who have received stock as part of their compensation, or from early investors. They sell the shares to investors who meet the revised SEC “accredited investor” criteria, working with companies to assure that transactions will be recognized. The minimum investment is $10,000 and may be higher for some companies.
- Nasdaq Private Market provides access to private-company shares for investors who meet the SEC’s accredited investor criteria.
- EquityBee is a private marketplace that allows investors to fund an employee’s stock options in exchange for a share in the proceeds from their eventual sale.
Because of the special circumstances surrounding the Mobileye IPO, there is a very low probability of finding shares for sale on pre-IPO marketplaces. Because Intel owns most Mobilye shares, there are not likely to be early investors trying to dispose of shares. Employees who received stock as compensation probably received Intel stock, not Mobileye stock, and are an unlikely source of shares.
If you find someone who claims to have Mobileye shares available for sale, be extremely cautious, especially if the source is not an established and reputable private equity marketplace like those listed above.
⚠️ There are substantial risks in pre-IPO investing. An IPO may not take place as expected, and if it doesn’t there may be no market for your shares. Learn more about pre-IPO investing.
Invest in the IPO
If pre-IPO shares are not available (very likely in the case of Mobileye) or you don’t meet the requirements, you might consider investing in the IPO itself. Major brokers often receive allocations of IPO shares, which they may sell to clients. If your broker has a share allotment you may be able to buy at the IPO.
You may still need to meet qualifying requirements, and many brokers give large, established clients preferential treatment when assigning IPO allocations.
You’ll need to fill out a form telling your broker how many shares you’d like to buy. There’s no assurance that you’ll get as many as you want or any shares at all.
Several major brokers provide IPO investing access. These brokers have different requirements.
- Charles Schwab requires a history of 36 trades or an account balance of at least $100,000.
- E*Trade has no account balance or trading history requirements for IPO participation. You may have to pass a questionnaire provided by the IPO underwriters.
- Fidelity allows IPO participation for clients who meet a minimum household asset requirement or are members of their Private and Premium client groups.
- TD Ameritrade allows IPO participation if they are part of the selling group. Participants must have a minimum account balance of $250,000 or have made 30 trades in the last calendar year.
Buying at the IPO has advantages over a pre-IPO purchase. At least you know that after the IPO there will be a public market for your shares. You may not be able to take immediate advantage of that market: IPO share purchases typically come with a 30 or 60-day lockup period.
Invest After the IPO
If you believe that Mobileye has a solid long-term future, the easiest way to invest is to buy through your regular broker after the IPO concludes. There will be no requirements or restrictions and you can sell the stock at any time you like.
You will not get the low per-share price that you’d get from a pre-IPO or even IPO investment, but you’ll face substantially less risk. You’ll also be able to see how the market responds to the IPO before you invest.
If the stock rises straight after the IPO your entry price may be well above the IPO price, but that is by no means guaranteed. If you intend to hold the stock for an extended period the difference is likely to be minimal.
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If you want to invest in Mobileye’s future right now and you can’t find a way to buy pre-IPO shares (which is most likely the case) you can invest indirectly by buying Intel shares. Intel will retain majority ownership of Mobileye and a successful Mobileye IPO is likely to drive gains for Intel shares.
Of course, Mobileye is only a small portion of Intel’s overall business, but as a major tech firm with solid operating margins and attractive valuation measures, it’s a reasonable investment in its own right!
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Are There Any Concerns About Mobileye?
Early-stage companies are often risky investments. In Mobileye’s case, those risks are lower than they might be for less established companies or companies that have less publicly available operating history. Still, like any investment, Mobileye presents risks.
- Mobileye faces serious potential liability issues. There’s a legal cloud over the entire ADAS/autonomous vehicle industry. It is not yet clear where liability will be assigned when autonomous vehicles or vehicles with ADAS systems are involved in accidents. Adverse legal rulings could substantially affect the Company’s value.
- Mobileye does not manufacture its own chips. Mobileye’s chips are primarily fabricated by Taiwan Semiconductor Corporation (TSMC), the world’s largest chipmaker. This dependence could cause supply disruptions, particularly if global chip shortages continue or in the event of a conflict between China and Taiwan.
- Rapidly evolving technology. Mobileye currently dominates its industry, but it’s a rapidly evolving market and many new competing systems are under development, both by competitors and by major vehicle makers seeking to develop their own in-house systems. There is no assurance that Mobileye will retain its technological or competitive advantages.
- Limited information. Intel’s reports provide substantial information on Mobileye’s past performance, but they do not contain offering details. The exact price, number of shares, and timing will not be known until the offering is scheduled and the registration statement is made public.
These risks may or may not emerge as significant issues, and there may also be risks that are currently not anticipated.
Mobileye’s IPO is highly anticipated. The Company is well established, and because of its association with Intel, we have detailed information about past performance. The Company is profitable and enjoys a dominant position in a fast-growing industry with very high potential.
Some observers see the Mobileye IPO as a catalyst that could break the IPO market out of its current doldrums. Of course, the opposite effect could prevail: the current slack market could drag down a prospective IPO or lead the underwriters to put it off until conditions are more attractive.
We know that Intel intends to take Mobileye public, but we don’t yet know when or what the target will be. Barring the unlikely possibility of finding pre-IPO shares for sale, for most investors that means watching, waiting, and making a final decision when more information is available!