The shares of Mobileye (MBLY: NASDAQ), the company steering the evolution of advanced driving technologies, were 37% higher when trading ended on the day of its initial public offering.
This is much higher than its targeted price and the success is of great significance during a year in which no other IPO was equally successful.
However, Mobileye’s shares were publicly traded earlier also, even before Intel (INTC: NASDAQ) purchased it for a price of $15.3 billion in 2017. But the purchase had not significantly benefitted Intel until now, when the stock of Mobileye, trading under the stock symbol MBLY, made a significant rise on Wednesday by reaching $27.85.
Intel holds more than 750 million Class B shares of Mobileye. This gives Intel control over the company, especially since the voting power of holders of Class B shares is ten times that of holders of Class A shares. Intel had wanted the price of the initial offering to be anywhere from $18 to $20 for one share. It had mentioned the fact in a filing made on October 18, 2022.
Intel is keen to have Mobileye listed on NASDAQ as part of its strategy to boost the company’s semiconductor business, in which it is facing stiff competition from companies like Nvidia and AMD (NASDAQ: AMD).
Since Mobileye’s IPO could raise $861 million, Intel wants to use some of that money to establish additional chip factories, which, in turn, will make it a source for other makers of microchips.
Despite Mobileye’s good performance on the first day of the public offering, its market capitalization is much below what Intel had originally expected. Since the economy is slowing down and interest rates are rising, investors are not too keen on investing in IPOs as they were in the last five years.
From the time it was established in 1999, Mobileye has teamed up with companies like Volkswagen, BMW, Ford, and GM to improve various driving-assistance technologies to help safe-driving, lane-keeping, etc., using its chips, software, and ‘EyeQ camera’.
According to what Amnon Shashua, the CEO of Mobileye, stated in the company’s IPO filing, as of now 50 companies are making use of his company’s technology in 800 different models of automobiles.
Since revenue recorded a 41% growth during the second fiscal quarter, reaching $460 million, the loss declined from the earlier $21 million to reach $7 million.
During the initial public offering, investors buy Class A shares. Intel was expecting to have a surplus of Class A stock amounting to 46.26 million in number, with the possibility of more, in case the underwriters opted to buy extra shares.
Intel’s own shares were not performing very well on Wednesday. While the NASDAQ itself was down 29%, Intel has come down 47% in the current year.