2024-01-11 22:39:00
Mobileye Faces Stock Fall After Profit Warning
Following the recent profit warning issued by Mobileye, the company’s stock has taken a hit. The stock fell by 30% after Bank of America lowered its recommendation to “missing yield” and cut the target price by over 50% to $22. The founder and CEO of Mobileye, Amnon Shashua, has defended the company’s position in an interview with Barons, stating that the stock fall is a result of a one-quarter inventory failure and not indicative of long-term impact on the business.
The stock fell after the company discovered that customers had built up an excessive inventory of its products due to over-ordering during the supply crisis caused by the pandemic. As a result, Mobileye expects a 50% decline in revenues for the first quarter compared to the previous year. For the rest of the year, revenues are expected to remain unchanged or increase at a single-digit rate.
Despite the profit warning, Shashua remains optimistic about the company’s future. He emphasized the growth potential of the company’s advanced products, such as the Supervision and Chauffeur systems, which offer higher levels of autonomy in driving. Furthermore, Mobileye has secured agreements with several car manufacturers, including Geely, Polster, Volvo, Mahindra, Porsche, and FAW, to supply its systems for their vehicles. The growing list of agreements with car companies is viewed as a significant indicator of the company’s long-term prospects.
Looking ahead to 2024, Mobileye expects its revenues to be in the range of $1.83-1.96 billion, lower than analysts’ expectations. The company also reported a positive third-quarter performance, with higher-than-expected profit and revenues attributed to a larger number of orders and an increase in the average price of its systems.
While Mobileye faces short-term challenges, the company remains confident in its long-term growth prospects, buoyed by its advanced products and strategic partnerships with car manufacturers. Investors will be closely monitoring the company’s performance and announcements in the coming months.
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