Intel announced its intent to take Mobileye, its self-driving car unit, public next year. The move will allow Intel to retain majority ownership of the unit, which could be valued at more than $50 billion.
You’ve probably never heard of it, but unlike major EV IPOs and SPACs this year, Mobileye has been around the block. The 22-year-old company pioneered adaptive cruise control and lane-keeping assistance using cameras on cars. In recent years, the company has built upon its foundational tech and moved into the wild west of self-driving vehicles. 🤠 Last year, Mobileye showcased its autonomous vehicle system.
Mobileye reportedly made over $442 million in operating income in the trailing 12 months, according to Wells Fargo. Analysts also underscore strong YoY growth. Yahoo Finance Anchor Brian Sozzi suggests that these figures support a high valuation. However, given the astronomical value afforded to businesses without production vehicles, it seems fairly likely that $50 billion will be a low bar to clear.
Mobileye still has a lot to prove — that’s what makes it an easy sell for Intel, who bought the company for $15.3 billion in 2017.
Sooo why is Intel spinning off one of its strongest business units?? Capital markets have ferocious demand for EVs and self-driving cars, which is one reason. But the move would also bolster Intel’s weak stock. $INTC has been in decline for the greater part of 2021, falling from the high-$60s to the low-$50s in months. There are plenty of reasons for that collapse in value, but Intel’s remedy is surprisingly simple: Intel bought Mobileye low and will be selling it very high.
Intel indicates that the listing will create value for $INTC shareholders. That has yet to be seen, but the deal’s announcement has given its stock some temporary reprieve. 🙏
$INTC is up 5.5% this week.