Mobileye Global, Inc. (MBLY) raced onto the IPO freeway – running up 37.95 percent to close at $28.97 today – its first day of NASDAQ trading. Volume: 27,929,867 shares. The stock roared out of the gate – rising 27.2 percent to $26.71 in its opening trade today (Oct. 26, 2022) on the NASDAQ on volume of 3,587,464 shares. Mobileye, Intel’s self-driving car unit, priced its long-awaited IPO at $21.00 – $1.00 above the top of its range – and sold 41.0 million shares – the same number in the prospectus – to raise $861 million on Tuesday night (Oct. 25, 2022). Those terms gave Mobileye a valuation of about $17 billion – about $2 billion more than if the IPO had been priced at $19.00, the mid-point of its $18.00-to-$20.00 range. That market cap is also about $2 billion more than what Intel paid for the Israeli company five years ago. (Editor’s Note: This column, published Tuesday night, was updated Wednesday morning with Mobileye’s debut.)
“Mobileye opening strong will help the IPO market,” a veteran IPO trader says.
Mobileye’s IPO is one of the biggest IPOs priced in 2022, a year when both the volume of deals and the amount of money raised have fallen to levels not seen since the financial crisis in 2009. Only two deals priced this year are bigger – Corebridge Financial, Inc. (CRBG), which raised $1.68 billion for its parent, AIG, and TPG, Inc. (TPG), which raised $1 billion in its IPO.
“We’re hoping that this will be the icebreaker in a frozen IPO market,” a seasoned IPO trader says.
This will be Mobileye’s second time behind the wheel of a publicly traded company. Mobileye went public the first time in 2014 at $25.00 a share, raising about $208 million with a valuation of about $5.3 billion. That IPO was a New York Stock Exchange (NYSE) listing. In 2017, chipmaker Intel bought the Israeli company for $15.3 billion.
This time around, the word on the Street by Monday afternoon was leaning heavily toward Mobileye’s IPO pricing at $21.00 – $1.00 above the top of its range.
You could almost hear Wall Street’s collective sigh of relief that the number of shares was not increased. When a deal is upsized – and especially if it’s also priced above range – that can “take the juice” right out of an IPO, as one veteran IPO pro put it.
Goldman Sachs and Morgan Stanley led the team of 10 joint book-runners, which included Evercore ISI, Barclays, Citigroup, BofA Securities, RBC Capital Markets, Mizuho, Wolfe Nomura Alliance and BNP PARIBAS. Cowen led the group of 14 co-managers.
In the Mood to Buy
Insider interest was strong, according to the prospectus. Two cornerstone investors, Baillie Gifford and Norges Bank Investment Management, were in for an aggregate of up to $330 million of stock in the IPO.
Co-founder and CEO Amnon Shashua also indicated interest in buying up to $10 million of stock in the IPO.
General Atlantic, L.P., a New York investment firm, will buy 4.76 million shares (4,761,905 shares) of Class A common stock in a private placement at $21.00 – the IPO price – to produce gross proceeds of $100 million, Mobileye said.
The mood on Wall Street turned more optimistic on Friday (Oct. 21, 2022) after the U.S. stock market’s powerful rally following comments by San Francisco Federal Reserve President Mary Daly. She said it may be time for the Fed to consider a slower pace of rate increases.
The stock market’s downturn and volatility – due to investors’ anxiety over inflation, rising interest rates, Russia’s war on Ukraine and fears of recession – have made conditions extremely difficult this year for IPOs.
“It could be a pivot,” a seasoned IPO trader said, referring to the rally on the San Francisco Fed president’s remarks.
Intel will still control Mobileye after the IPO through its ownership of all of the Class B shares of common stock. That stake gives Intel control of 99.4 percent of the voting power.
Mobileye will use some of the IPO proceeds to repay some of its debt to Intel, the prospectus says.
Eyes on the Road
Based in Jerusalem, Mobileye pioneered the development of advanced driver assistance systems (ADAS) and autonomous driving technology more than 20 years ago. The company was founded in 1999. Mobileye’s chips, software and hardware, including cameras and lidar, provide collision avoidance and other safety features considered standard in most of the “smart” cars on the road today. Mobileye is working with more than 50 of the world’s vehicle manufacturers (Original Equipment Manufacturers, aka OEMs) to implement its ADAS solutions, the prospectus says.
Mobileye is not profitable. The company reported a net loss of $138.0 million on revenues of about $1.54 billion for the 12 months that ended on July 2, 2022.
Self-driving cars are the future, according to Mobileye. It envisions self-driving cars as part of a new normal of “shared mobility.” Mobileye acquired Moovit, an urban mobility and transit app, for $900 million from Intel on May 31, 2022, the prospectus says.
But not everyone is buying into Mobileye’s vision of self-driving cars. There are still plenty of skeptics who believe that self-driving cars will not rule the road any time soon.
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