The markets are doing much better than they were last week. With concerns about the new variant receding in the minds of investors, we see the stock market make sizable gains across all indexes. While most market traders were watching the markets tick up, there was a big piece of IPO news worth covering. Intel (NYSE: INTC) announced that it plans to take its self-driving car unit, Mobileye, public sometime in 2022.
Due to the excitement surrounding self-driving cars, especially EVs, the valuation for Intel’s new business unit could be in the tens of billions. Early estimated predict that the new IPO could be worth over $50 billion, if not more. Intel confirmed that it has no plans to spin off its majority ownership in the company but will sell a small stake to the public in order to help raise additional funds.
“Amnon and I determined that an IPO provides the best opportunity to build on Mobileye’s track record for innovation and unlock value for shareholders,” Intel CEO Pat Gelsinger said in the statement, referring to Mobileye CEO Amnon Shashua in his statement.
Gelsinger has been facing an ongoing battle from activist investors, such as Third Point, which are trying to push for Intel to spin off its expensive chip manufacturing business. Despite the ongoing semiconductor shortage, Intel has been struggling to get its manufacturing issues sorted out despite it being over a year since the problems began.
Back in 2017, Intel bought Mobileye for $15.3 billion. Other companies like Nvidia and Qualcomm were both working on developing driverless systems for cars. Intel has gone on to say that only Tesla’s automotive driving system is comparable to its Mobileye technology. Most analysts seem to agree with this assessment.
As for the specific date when Mobileye will go public, it will likely happen during H1 2022. This year has already been a record-breaking one for IPO fundraising, so it seems likely that Mobileye will also have success going into 2022, barring some unforeseen economic shift. Given how esteemed EV-related stocks are, it’s possible Mobileye could be worth far more than its initial $50 billion estimate.
Shares of Intel were up around 4.2% on the news. Over the long term, the company hasn’t fared that well in 2021. Intel stock is up only 5.9% since the year began, compared to the 20%+ gains the Nasdaq has seen over the same period.
Intel Company Profile
Intel is the world’s largest chipmaker. It designs and manufactures microprocessors for the global personal computer and data center markets. Intel pioneered the x86 architecture for microprocessors. It was the prime proponent of Moore’s law for advances in semiconductor manufacturing, though the firm has recently faced manufacturing delays. While Intel’s server processor business has benefited from the shift to the cloud, the firm has also been expanding into new adjacencies as the personal computer market has stagnated. These include areas such as the Internet of Things, artificial intelligence, and automotive. Intel has been active on the merger and acquisitions front, acquiring Altera, Mobileye, and Habana Labs in order to bolster these efforts in non-PC arenas. – Warrior Trading News
