Intel Denies Plans to Divest Majority Stake in Mobileye, Shares Bounce Back

Debunking Rumors of Divestment

Intel has refuted rumors that it was considering divesting from Israeli autonomous driving firm, Mobileye Global. These rumors, which were circulated by Bloomberg reporters earlier this month, have been dismissed by the chipmaker.

In a statement, Intel confirmed its commitment to Mobileye, stating, "As the majority shareholder in Mobileye (MBLY), Intel has an unwavering focus on value creation and is excited about the future of its business."

Intel's Statement on Mobileye

Intel further clarified its position, stating, "We currently do not have any plans to divest a majority interest in the company." The chipmaker also highlighted the benefits of providing Mobileye with separation and autonomy, stating that this has "enhanced its ability to capitalize on growth opportunities and accelerate its path to creating even greater value."

Intel's belief in the future of autonomous driving technology and Mobileye's unique role in the development and deployment of advanced driver assistance systems (ADAS) was also reiterated.

Intel's History with Mobileye

Intel acquired the Israeli firm in 2017 for slightly more than $15 billion. By 2022, Mobileye had made its debut on the public markets through an initial public offering in New York. However, its shares have declined by 73% this year and are down 45% from the IPO price.

Despite this, Mobileye shares have risen by 7.5% in premarket trading following Intel's announcement.

Mobileye's Market Position

Mobileye's float is 12.7% short, equivalent to about 11.7 million shares. Bearish positions have been unwinding since late April.

Goldman's Mark Delaney informed clients about a week ago, "We are buy-rated on MBLY shares. Our 12-month price target is $24, which is based on 30X applied to our Q5-Q8 EBITDA estimate (ex. SBC)."

Intel's Future Plans

Earlier this week, Intel CEO Pat Gelsinger outlined the chipmaker's next steps in an ambitious turnaround plan. This includes a deal with Amazon, a pause in European plant expansion, and thousands more layoffs.

Bottom Line

Intel's denial of divestment plans in Mobileye has brought some stability to the latter's shares. It's clear that Intel sees a promising future in autonomous driving technology, with Mobileye playing a crucial role in this vision. What are your thoughts on this development? Feel free to share this article with your friends and discuss. Don't forget to sign up for the Daily Briefing, which is available every day at 6pm.