Intel's Mobileye raises IPO price to $21, MBLY stock begins trading on Wednesday
- MBLY will be Mobileye's new ticker.
- Underwriters were able to push up the initial $18-$20 range.
- Intel will retain voting control of the stock through Class B shares.
Intel's (INTC) spin-off of its Mobileye autonomous vehicle unit is finally upon us. Shares of the Israel-based company, which will trade under the ticker MBLY, are set to trade on Wednesday, October 26, at an initial price of $21. This is higher than the $18 to $20 range that was proposed just last week. While Intel is expected to retain a majority share of the company, MBLY stock will be able to raise about $861 million after placing 41 million shares with institutions and others contacted by book runners Goldman Sachs and Morgan Stanley.
The $16.7 billion valuation is well down from the estimated $50 billion that was rumored several years ago. Intel bought the previously public company in 2017 for $15.3 billion. The semiconductor powerhouse will still retain about 99% of the voting power through its Class B shares. The IPO has taken many by surprise as this is a poor climate to sell shares. All major indices have fallen asunder in 2022, and the Renaissance IPO Index is down more than 51% year to date.
Interestingly, a good percentage of the funds raised will be paid back to parent company Intel for a loan. The rest will be used for corporate purposes. Mobileye will then raise an additional $100 million by selling another 4.76 million shares once the current IPO is complete. Underwriters also have 30 days to purchase an additional 6.15 million shares.
Mobileye had revenue of $854 million in the first half of 2022 but registered a loss of $67 million. If sales were comparable in the second half of the year, this would mean that Mobileye was IPOing at 9.8 times revenue. Turnover is said to have grown 22% YoY for the first half of the year.
It is thought that Intel is pushing forward with the IPO due to the fact that it needs funds for its $20 billion chip foundry being built outside Columbus, Ohio. CEO Pat Gelsinger has said the site may eventually require $80 billion to achieve its potential as the embattled CEO seeks to turn the legacy chip designer into a leading US chip manufacturer that can compete with the likes of Samsung and Taiwan Semiconductor (TSM). Intel stock is relatively flat at $27.44 at the time of writing.
Author
Clay Webster
FXStreet
Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.
