Mobileye Global: CEO Makes $10 Million Bet on Future Strength

Key Points

• Mobileye leads the advanced driver assistance systems (ADAS) market with a commanding 70% share.
• As automakers clear out excess EyeQ chip inventory, Mobileye faces economic headwinds in China, prompting a cut in their full-year 2024 guidance.
• Mobileye's CEO, Shashua, demonstrated confidence in the company by purchasing 631,963 shares of MBLY stock, valued at approximately $10.4 million.

Mobileye Global Inc. NASDAQ: MBLY is a leading developer of advanced driver assistance systems (ADAS) solutions. The company's chips are used in modern automobiles and electronic vehicles (EVs) worldwide. The company makes its revenues from selling its propriety ADAS chips, licensing its software algorithms, and potentially deriving per-mile fees with autonomous vehicles.

Mobileye is a dominant player in the ADAS segment, controlling nearly 70% of the market share. Its systems are in over 150 million vehicles from manufacturers, including Ford Motor Co. NYSE: F, General Motors Co. NYSE: GM, Honda, Nissan, BMW, Audi, and Volkswagen AG OTCMKTS: VWAGY. Mobileye is still majority-owned by chip giant Intel Co. NASDAQ: INTC.

Mobileye operates in the auto/tires/trucks sector, competing with Aptiv PLC NYSE: APTV, NVIDIA Co. NASDAQ: NVDA, and Magna International Inc. NYSE: MGA.

EyeQ System-on-a-chip (SoC) Technology

Mobileye’s main product is its EyeQ system-on-a-chip (SoC). Its ADAS solutions are complete systems built around the EyeQ chip, including sensors, cameras, and software algorithms. Mobileye offers various levels of ADAS systems that provide basic safety features like collision avoidance, lane departure warnings, adaptive cruise control, traffic sign recognition, and pedestrian and cyclist recognition and detection. Most of its revenue is derived from selling EyeQ chips to auto suppliers and manufacturers.

Mobileye SuperVision

Mobile SuperVision is dubbed the bridge to consumer autonomous vehicles (AVs). SuperVision systems can provide hands-free driving. They combine the capabilities of autonomous driving to enable drivers to take their hands off the wheel but still require them to pay attention to the road. They incorporate functions like autonomous lane changes, parking visualization for autonomous parking, and accelerating and decelerating to avoid collisions and being cut off.

SuperVision is the production version of its autonomous driving solution using cameras and sensors. It uses 11 cameras, Lidar and driver monitoring, and its EyeQ 6 SoC. These next-gen ADAS systems are being deployed in some EVs manufactured by ZEEKR Intelligent Technology Holding Ltd. NYSE: ZK.  

MBLY Stock Forms a Descending Triangle 

The daily candlestick chart for MBLY shows a descending triangle pattern. The stock collapsed 22.5% following its latest earnings results. The gap fill at $18.45 was the starting point of the upper descending trendline resistance, meeting the flat-bottom lower trendline support at $13.93. The daily relative strength index (RSI) fell back under the oversold 30-band. Pullback support levels are at $13.83, $12.56, $11.57, and $10.52.  

Mobileye's Underwhelming Results

Mobileye reported Q2 2024 EPS of 9 cents, beating consensus estimates by a penny. Revenues fell 3.3% YoY to $439 million, beating $424.34 million consensus estimates. The number of systems shipped rose 110% YoY, significantly improving operating loss and adjusted operating profit.

Inventory supply glut issues have been clearing up since Q1 2024. Excess inventory was a result of supply chain concerns in previous years that led to customer overstocking. The company believes EyeQ inventory at its Tier 1 customers has fully normalized as of the end of the second quarter 2024.

Mobileye Issues Downside Guidance on China Slowdown

Economic conditions in China were the primary driver undergoing a reshuffling process that led to Mobileye slashing its full-year 2024 guidance. The company reduced second-half volume and revenue expectations due to China-related macro factors.

Mobileye expects full-year 2024 revenues of $1.60 billion to $1.68 billion versus $1.88 billion consensus estimates. This was down from prior guidance of $1.83 billion to $1.96 billion. The company lowered its adjusted operating income from $152 million to $201 million, down from $270 million to $360 million.

Mobileye CEO Amnon Shashua commented, “We are glad to report that the excess inventory at Tier 1 customers that meaningfully impacted our business in the first half of 2024 appears to be almost fully behind us.”

Shashua continued, “But a more significant than anticipated softening of business conditions in China (affecting the industry as a whole) is expected to lead to challenges in the second half. While the conditions in China are highly volatile at the moment, we continue to invest in China for the mid and long-term as we see the potential of a lucrative market over time, particularly in light of new initiatives that we believe will strengthen our positioning,"

On Aug. 6, 2024, it was reported that CEO Shashua bought 631,963 shares of MBLY common stock between $15.50 and $17.00 for around $10.4 million.

Mobileye analyst ratings and price targets are at MarketBeat. There are 24 Wall Street analyst ratings on MBLY stock, comprised of one Strong Buy, 14 Buys, eight Holds, and one Sell. Consensus average analyst price targets point to a 118.2% upside to $31.42 per share. Mobile has a 16.12% short interest.