Shares in automotive chip maker Mobileye Global Inc. jumped nearly 15% today after its majority shareholder, Intel Corp., said that it has no plans to divest its interest in the company.
Reports earlier this month suggested that Intel was considering offloading its 88% stake in the company via public markets or directly to a third party. It was claimed that Intel planned to do so as part of plans to cut operating costs by $10 billion next year, combined with Mobileye delivering a disappointing earnings report in its most recent quarter.
Intel cut straight to the point in a statement, saying that “we currently do not have any plans to divest a majority interest in the company” and that it has an “unwavering focus on value creation and are excited about the future of its business.”
Mobileye was acquired by Intel for $15.3 billion in March 2017 before being partially floated in an initial public offering at $21 per share in October 2022. The company stock hit highs of around $44 per share but dropped as low as $10.48 per share over the last six months. As of yesterday’s close of trading, Mobileye shares were sitting at $11.72.
Mobileye develops technology that powers camera systems used by autonomous and semi-autonomous vehicles. The company offers technology that includes artificial intelligence and deep learning to create hardware and software for use by automakers. Clients include BMW AG, Audi AG, Volkswagen AG, Nissan Motor Co. Ltd., Honda Motor Co. Ltd. and General Motors Co.
In its second quarter, the company had an adjusted net income of $76 million on revenue of $439 million, with sales declining 3% year-over-year. Though the top line figures could have been better, Intel noted in its statement that “we believe in the future of autonomous driving technology and in Mobileye’s unique role as a leader in the development and deployment of advanced driver assistance systems.”
Intel’s public confirmation of support for Mobileye has been well-received. Bloomberg Intelligence analyst Jake Silverman noted that “Intel’s decision to maintain majority ownership of Mobileye removes a near-term overhang that may have lingered given Intel’s difficult financial position.”