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Mobileye Postponing $5 Billion IPO


Mobileye AV in New York City Trial (Company Pic)

Mobileye, it seems, will need to postpone its initial public offering (IPO), which the Israeli company owned by Intel that develops automated driving systems expected would bring it as much as a $50 billion valuation. The reason for the delay, not surprisingly, is the current state of the markets around the world.

In 2017, Intel bought out the company for $15.3billion.

Mobileye Founder and CEO Amnon Shashua explained to the company’s employees in a letter, “The issue is the ‘market condition.’ I do not need to tell you about the status of the stock market – you all see it for yourselves. The problem with the ‘bad market condition’ is not valuation but stability.”

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It was in March that Mobileye first revealed plans for what would, in effect, be the company’s second IPO. In 2014 the company held its first IPO on the NYSE, raising about $1 billion at a market cap of $5.3billion. At the time this made it the most successful Israeli IPO of all time.

With its decision to postpone the IPO Mobileye joins other Israeli Startup Nation firms that have been having problems lately. A number have been forced to lay off staff. As for IPOS, eToro, the Israeli startup that offers its clients a trading platform, has finally scrapped its planned IPO and will instead try to raise another $1 billion in investment. But even if eToro succeeds in that endeavor it will still see a valuation of only half of the $10 billion originally anticipated from an IPO.

And the Startup Nations companies that recently went through with their IPOs are not doing so well themselves. Israeli fintech firm Pagaya saw its shares plummet, losing billions in valuation, within a week of its IPO.

So, what happened? Well, a convergence of issues are pushing down the markets. The War in Ukraine is causing shortages and a sharp increase in the price of oil due to economic sanctions imposed on Russia. And oil is central to world economies. Its rise fed into the high inflation that was already in effect due to problems with the worldwide supply chains after the coming out of the Covid shutdowns.

To combat inflation, the U.S. Federal Reserve raised interest rates. This caused drops in the stock markets. Stock markets and bond markets are negatively correlated in that when interest rates rise, stocks go down. This is because bonds, which are usually a safer investment, offer higher yields so investors sell stock to buy them. It is also because higher interest rates mean growth costs more so investors expect lower profits and possible contraction.

Founded in 1999, Mobileye offers autonomous-driving and driver-assist technologies, harnessing “world-renowned expertise in computer vision, machine learning, mapping, and data analysis.” The idea is simple: warning systems alert drivers of a possible collision. Eventually, the idea is to have entirely self-driving cars that can avoid accidents entirely.

Mobileye says that its technology enables self-driving vehicles and mobility solutions, powers industry-leading advanced driver-assistance systems, and delivers valuable intelligence to optimize mobility infrastructure. Mobileye pioneered technologies such as True Redundancy sensing, REM crowdsourced mapping, and Responsibility Sensitive Safety (RSS) technologies that are driving the ADAS and AV fields towards the future of mobility.

Mobileye had revenue of $1.4 billion in 2021, up 39% from 2020.



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