Intel's self-driving tech company 'Mobileye' sees a 10% trading boom

Mobile shares closed up more than 37% in the stock market on Wednesday after the maker of self-driving car technology was spun off Intel.

In a year that has seen no significant tech IPOs in the United States, Mobileye offers investors an opportunity to tap into the growth field. But it is not a new name for the market.

Mobileye was publicly traded before Intel bought the Israeli company in 2017 for $15.3 billion. At its IPO price of $21, Mobileye was valued at just $17 billion, giving Intel minimal gains to date. The stock, trading under the ticker MBLY, rose to $27.85 on Wednesday.

Intel will retain control of Mobileye and retain more than 750 million shares of Class B stock, which has 10 times the voting power of Class A stock. The company said in an Oct. 18 filing that it expected a price between $18 and $20 per share on the offering.

Amnon Shashua, president and chief executive officer of Mobileye Global Inc., and Patrick Gelsinger, chief executive officer of Intel Corp., outside Nasdaq MarketSite during the company’s IPO in New York, U.S., Wednesday, Oct. 26, 2022.

Michael Nagle Bloomberg | Getty Images

The IPO raised $861 million, and the move to list Mobileye on the Nasdaq is part of Intel’s broader strategy to turn around its core semiconductor business, which has lagged behind rivals such as AMD and Nvidia recent years. Intel said it would use some funds from the Mobileye listing to build more chip factories as it embarks on a capital-intensive process to become a foundry for other chipmakers.

However, Mobileye’s market cap is well below Intel’s earlier expectations, the latest sign that tech investors have cooled on IPOs and their valuations have been readjusted from the halcyon days of the past half-century as rising on interest rates as the economy slows down.

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Founded in 1999, Mobileye has partnered with Audi, BMW, Volkswagen, GM, and Ford to develop advanced driving and safety features such as driver assistance and lane keeping using the company’s “EyeQ” camera, chip and software. Mobileye CEO Amnon Shashua said in the IPO filing that 50 companies are currently using the company’s technology across 800 vehicle models.

Revenue in the second quarter jumped 41% to $460 million. The net loss narrowed to $7 million from $21 million.

Class A stock is what investors will buy in the IPO, and Intel expected 46.26 million Class A shares to be outstanding, and there could be more if the underwriters decide to exercise their option to buy additional shares.

Intel shares were down slightly on Wednesday and have lost about 47% of their value this year, while the Nasdaq is down 29%.

— CNBC’s Kif Leswing contributed to this report.

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