Mobileye Shares Open Higher in Stock-Market Debut

The shares were sold late Tuesday at a price above the targeted range of $18 to $20 a share, though that had been lowered dramatically prior to the offering. Advisers to Mobileye were hyper aware of the perils facing U.S. IPOs now given how choppy markets have been this year and priced the offering conservatively, according to people close to the deal. IPOs in the U.S. had raised only $7.4 billion so far this year through Tuesday, putting 2022 on track to be the worst year for new issues in decades, according to Dealogic.

Still, Intel and underwriters overseeing the deal were determined to move forward now with the IPO, expected to be the last major listing of the year. Intel Chief Executive

Pat Gelsinger

has said the chip maker doesn’t need the money the offering will generate—more than $800 million—and that listing Mobileye would give the self-driving car unit a higher profile and attract more business.

Founded in 1999 by Amnon Shashua, Mobileye developed technology that helped alert drivers to potential collisions with other cars or pedestrians. It first entered the stock market in a 2014 IPO that valued it at around $5 billion, making Mobileye the largest Israeli company to go public at the time. Three years later, Intel acquired the money-losing company for around $15 billion. When The Wall Street Journal first reported late last year that Intel would spin off Mobileye in an IPO, the self-driving car unit was expected to fetch a valuation north of $50 billion.

The lower-than-previously expected valuation is the latest example of souring views on advanced-vehicle technology.

Just a few years ago, the industry was promising that the broad deployment of driverless cars was just around the corner, setting off an arms race among companies not wanting to be left behind. General Motors Co.‘s $1 billion deal to acquire self-driving car startup Cruise was echoed by deals by

Ford Motor Co.

and spending by ride-hailing giants

Uber Technologies Inc.

and

Lyft Inc.

Lyft co-founder

John Zimmer

in 2016 predicted driverless cars would account for the majority of its trips within five years and that personal car ownership would all but end in major U.S. cities by 2025.

Daniel Morgan, a senior portfolio manager who focuses on technology at Synovus Trust Co., is skeptical about a stand-alone Mobileye, especially when it comes to competing with deeper-pocketed rivals such as Google-parent

Alphabet Inc.’s

Waymo and

Amazon.com Inc.’s

Zoox.

“The market recently has not valued tech companies with unproven business models that may not become profitable,” he said. “How does Mobileye generate enough sales to get out of the red?”

In 2021, Mobileye recorded revenues of roughly $1.4 billion, according to regulatory filings, up more than 40% from the prior year.

Intel’s Mr. Gelsinger sounded optimistic this week, noting car makers are targeting deployment of partially automated or driverless vehicles in the middle of the decade and saying the technology will then be “pretty commonplace.”

“They’re designing those vehicles today,” he said during the Journal’s annual Tech Live conference.

On Monday, Lyft’s Mr. Zimmer remained optimistic about AVs even if his timeline was off.

“It is not a matter of if this technology comes to market but when,” he said.

Write to Corrie Driebusch at [email protected] and Tim Higgins at [email protected]

The shares were sold late Tuesday at a price above the targeted range of $18 to $20 a share, though that had been lowered dramatically prior to the offering. Advisers to Mobileye were hyper aware of the perils facing U.S. IPOs now given how choppy markets have been this year and priced the offering conservatively, according to people close to the deal. IPOs in the U.S. had raised only $7.4 billion so far this year through Tuesday, putting 2022 on track to be the worst year for new issues in decades, according to Dealogic.

Still, Intel and underwriters overseeing the deal were determined to move forward now with the IPO, expected to be the last major listing of the year. Intel Chief Executive

Pat Gelsinger

has said the chip maker doesn’t need the money the offering will generate—more than $800 million—and that listing Mobileye would give the self-driving car unit a higher profile and attract more business.

Founded in 1999 by Amnon Shashua, Mobileye developed technology that helped alert drivers to potential collisions with other cars or pedestrians. It first entered the stock market in a 2014 IPO that valued it at around $5 billion, making Mobileye the largest Israeli company to go public at the time. Three years later, Intel acquired the money-losing company for around $15 billion. When The Wall Street Journal first reported late last year that Intel would spin off Mobileye in an IPO, the self-driving car unit was expected to fetch a valuation north of $50 billion.

The lower-than-previously expected valuation is the latest example of souring views on advanced-vehicle technology.

Just a few years ago, the industry was promising that the broad deployment of driverless cars was just around the corner, setting off an arms race among companies not wanting to be left behind. General Motors Co.‘s $1 billion deal to acquire self-driving car startup Cruise was echoed by deals by

Ford Motor Co.

and spending by ride-hailing giants

Uber Technologies Inc.

and

Lyft Inc.

Lyft co-founder

John Zimmer

in 2016 predicted driverless cars would account for the majority of its trips within five years and that personal car ownership would all but end in major U.S. cities by 2025.

Daniel Morgan, a senior portfolio manager who focuses on technology at Synovus Trust Co., is skeptical about a stand-alone Mobileye, especially when it comes to competing with deeper-pocketed rivals such as Google-parent

Alphabet Inc.’s

Waymo and

Amazon.com Inc.’s

Zoox.

“The market recently has not valued tech companies with unproven business models that may not become profitable,” he said. “How does Mobileye generate enough sales to get out of the red?”

In 2021, Mobileye recorded revenues of roughly $1.4 billion, according to regulatory filings, up more than 40% from the prior year.

Intel’s Mr. Gelsinger sounded optimistic this week, noting car makers are targeting deployment of partially automated or driverless vehicles in the middle of the decade and saying the technology will then be “pretty commonplace.”

“They’re designing those vehicles today,” he said during the Journal’s annual Tech Live conference.

On Monday, Lyft’s Mr. Zimmer remained optimistic about AVs even if his timeline was off.

“It is not a matter of if this technology comes to market but when,” he said.

Write to Corrie Driebusch at [email protected] and Tim Higgins at [email protected]