Intel Slashes Mobileye IPO Valuation Again to $16 Billion

(Bloomberg) -- Mobileye Global Inc., the self-driving technology company owned by Intel Corp., is targeting a valuation of about $16 billion in a public offering, far below its previous target amid a rocky year for new listings.

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Intel had recently lowered its expected valuation of Mobileye to $30 billion due to turbulent market conditions, Bloomberg News reported last month.

The company plans to sell 41 million shares for $18 to $20 each, raising $820 million according to a filing on Tuesday with the US Securities and Exchange Commission. After the offering, Intel will retain a controlling stake in Mobileye. The shares are set to start trading within weeks.

Despite the drop in valuation, the listing is set to be one of the year’s biggest IPOs. Amid heightened volatility and disappointing debut performances of last year’s listings, IPO volume in the US has plummeted to $22.3 billion this year, compared with $277 billion at this point in 2021, according to data compiled by Bloomberg. Instacart Inc., another highly anticipated IPO, last week cut its valuation for the third time, to $13 billion, and is waiting for the markets to settle before going ahead with a listing. Another deterrent for new listings is the fact that many companies that went public in 2020 and 2021 are trading below their IPO prices.

But some analysts said it was reasonable for Intel to go through with the listing despite the poor market timing. Analysts at Bernstein said Intel likely needs the money it will receive from the deal, “given the way their own business is currently trending.” And Vital Knowledge analysts wrote that the “headline is negative, but keep in mind the $50B valuation was floated back in December, so no one should be shocked that the number is now lower today.” Intel shares were up about 1.4% in early trading in New York.

Mobileye, founded in 1999 by Amnon Shashua, was acquired by Intel in 2017 in a $15.3 billion deal that took the company private, according to the prospectus. Intel Chief Executive Officer Pat Gelsinger is seeking to capitalize on the Israel-based business, which makes chips for cameras and drive-assistance features, and is seen as a prized asset as the car industry races toward fully automated vehicles. But the bright future for electric vehicles that was prophesied by Intel, Waymo and others has sputtered. A world full of robo-taxis seems at best decades away and the losses for investors who put faith in the field are mounting.

Read more about how even after $100 billion in investments, the self-driving car industry is going nowhere

Chip stocks have also suffered in recent weeks with a string of warnings coming from the likes of Micron Technology Inc. and Samsung Electronics Co. The Philadelphia Semiconductor Index is down 44% this year and is on track for its worst annual performance in 14 years.

Mobileye will use the cash raised to toward net proceeds for working capital and general corporate purposes, as well as repaying a portion of debt owed to Intel. As of July, it had $774 million of cash and cash equivalents. In the 12 months ended Dec. 25, it had a net loss of $75 million on revenue of $1.39 billion.

Shashua has indicated an interest in purchasing as much as $10 million shares of Class A common stock, according to the filing. Baillie Gifford and Norges Bank Investment Management, as cornerstone investors, have indicated interest in purchasing up to an aggregate of $330 million shares. Growth equity firm General Atlantic also said it would buy $100 million of shares.

Goldman Sachs Group Inc. and Morgan Stanley are leading the offering. Mobileye plans for its shares to trade on Nasdaq under the symbol MBLY, the same ticker it used when it went public the first time in 2014.

(Updates with analyst comments in fifth paragraph, share trading)

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