mobileye stock ipo autonomous driving

Last month, Intel listed Mobileye (NYSE: MBLY), its autonomous driving business. The stock had a strong listing despite the slump in growth stocks. Wall Street analysts also have a bullish view of Mobileye stock even as the optimism towards self-driving has come down.

RBC recently initiated coverage on MBLY stock with an outperform rating. Citi and Mizuho also have a buy rating on the company. Now, Goldman Sachs analyst Mark Delaney has initiated coverage on Mobileye stock with a buy rating and a $36 target price. We have a guide on how to buy stocks with credit cards.

In a client note, Delaney said, “We believe that Mobileye is the leading auto tech enabler for ADAS [advanced driver assistance systems] and AV [autonomous vehicle] applications, and we view the company as well positioned for growth given its vision/AI capabilities that are applicable for both ADAS and AVs, its ability to provide full solutions, and its strong market share.”

Notably, Intel priced Mobileye IPO at $21. The shares surged on the listing and now trades around $28. The IPOs strong performance looks heartening as most IPOs of 2022 trade well below the IPO price. Companies that went public through SPAC reverse mergers have fared even poorly.

Goldman Sachs Initiated Coverage on Mobileye Stock with a Buy Rating

Meanwhile, Goldman Sachs finds Mobileye stock attractive. It said, “We expect the combination of strong unit growth and higher ASPs to contribute to the mid 30% revenue CAGR through 2026, with about a third from higher units and two thirds of the sales growth from the increase in revenue per unit.”

Notably, some companies are reconsidering their autonomous investments. Uber was among the first companies to ditch its autonomous driving business and in 2020 it sold the business to Aurora Innovation.

Last month, Argo AI, an autonomous driving startup backed by Ford (NYSE: F) and Volkswagen shut down. Ford wrote off its investment in the company and took a non-cash charge of $2.7 billion.

More recently, Nuro, an autonomous driving startup backed by Alphabet, Tiger Global, and SoftBank announced that it is laying off a fifth of its workforce as it strives to save cash amid the perennial cash burn.

Some Companies Are Reconsidering Their Autonomous Driving Investments

Alphabet, which has an autonomous driving subsidiary Waymo, is also facing shareholder heat over the spiraling losses. TCI Fund Management, which holds around $6 billion worth of Alphabet stock, wrote a letter to the company calling upon the management to cut losses in Waymo.

In the letter, TCI said, “Unfortunately, enthusiasm for self-driving cars has collapsed and competitors have exited the market.” It also talked about Volkswagen and Ford exiting the business.

Meanwhile, it is not all gloom and doom and some companies continue to invest in autonomous driving. At its investor day, General Motors said that it is not backing out from investing in the business. It has an autonomous venture named Cruise. Microsoft also invested in Cruise last year.

Tesla also sees autonomous driving as a key driver. The company has raised FSD (full self-driving) prices twice this year to $15,000. The company’s CEO Elon Musk believes that over the long term, FSD would cost $100,000.

Chinese companies like Baidu and Xpeng Motors are also marching ahead in the autonomous driving business.

EV and autonomous driving stocks have meanwhile sagged this year and even Tesla is trading at a two-year low. Along with the sell-off in growth stocks, Musk’s ownership of Twitter is also fueling to the crash in Tesla stock.

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