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.