Mobileye Faces Stock Plunge as Customer Orders Predicted to Plummet in Q1 2024
Mobileye, the self-driving technology company majority owned by Intel, delivered a cautionary note on Thursday, warning of a significant anticipated drop in customer orders for the first quarter of 2024. The announcement prompted a sharp decline in shares, plunging by as much as 25% during Thursday morning trading.
The company attributed this expected decline to an awareness of excess inventory at its customers. Automakers had previously stockpiled Mobileye's chips in response to global supply chain challenges, aiming to mitigate potential part shortages. However, as supply chain concerns have eased, Mobileye anticipates that customers will utilize the accumulated excess inventory in the first quarter of the year.
This adjustment in inventory usage implies that customers will not be placing new orders for chips at the same level as the previous year's corresponding quarter. The announcement casts a shadow on Mobileye's recent success, where its stock had traded above its initial public offering price until this development.
Intel's journey with Mobileye includes an initial announcement to take the company private in 2017 for over $15 billion, followed by a public offering in October 2022. Despite Intel selling $1.5 billion of its Mobileye stake in the previous year, the company still maintains an 88% stake in Mobileye.
While the recent announcement has tempered some of Mobileye's gains, IPO buyers still hold a positive position, remaining up around 12%. As the company navigates this challenging period, the impact on its stock and strategic outlook will be closely watched by investors and industry observers alike.
In conclusion, Mobileye, the autonomous driving technology company majority-owned by Intel, faces a challenging period as it warns of a substantial drop in customer orders for the first quarter of 2024. This cautionary announcement triggered a significant plunge in shares, declining by as much as 25% during Thursday morning trading.
The company attributes the anticipated drop in orders to an awareness of excess inventory at customer facilities. While automakers had previously stockpiled Mobileye's chips as a precaution against global supply chain disruptions, the easing of supply chain concerns is now expected to lead customers to utilize existing inventory in the first quarter, reducing the need for new orders.
This development marks a notable shift for Mobileye, which had experienced success with its stock trading above its initial public offering price until this recent announcement. Intel's involvement in Mobileye's journey, from taking the company private in 2017 to a subsequent public offering, adds a layer of complexity to the situation.
As Mobileye grapples with the impending decline in orders and the impact on its stock performance, investors and industry observers will closely monitor the company's strategic response and its ability to navigate through this challenging period in the autonomous driving technology sector.
