Mobileye Global Stock Drops on Revenue Warning. What to Know.

Mobileye said it expects first-quarter revenue to be “significantly below” the $458 million in revenue it generated in the first quarter of 2023. The company said the forecast was based on an excess inventory of its EyeQ computer chips that was being held by some of its customers. Analysts were forecasting first-quarter revenue to rise to $557.1 million, according to FactSet, a gap of some $320 million in sales.

The revenue warning is a disappointment for Mobileye investors, but it shouldn’t matter that much for self-driving cars.

Mobileye’s problem boils down to overproduction and channel inventories. It doesn’t mean that auto makers are slowing the adoption of driver assistance technologies.

“The update is clearly disappointing but doesn’t appear long-term thesis changing,” wrote Citi analyst Itay Michaeli in a Thursday report, who rates shares Buy and has a $72 price target on shares. He still sees growth for Mobileye down the road. Wall Street sees annual sales hitting $5 billion by 2026, up from about $1.9 billion expected for 2024.

Baird analyst Luke Junk rates shares Buy and has a $50 price target for the stock. Mobileye’s cut reflects 6 or 7 million units of excess inventory, he wrote in a Thursday report. That bubble can be worked through in one quarter, but it’s clearly “incrementally negative.”

Mobileye said in its release that overall inventory at its customers should be at normal levels by the end of 2024.

The company expects total revenue in the range of $1.83 billion to $1.96 billion for 2024. Analysts had forecast revenue of $2.56 billion, according to FactSet. Mobileye said it expects a full-year adjusted operating profit in the range of $270 million to $360 million. Analysts expected about $750 million.

The revenue warning is also affecting Mobileye’s former parent and majority shareholder
Intel.
 Shares of Intel were down 1% after the news, reversing earlier gains.

Intel spun off Mobileye in 2022 but still retains an 88% stake in the company at the end of September. The fall in Mobileye’s share price weakens a potential source of funding for Intel, which sold a stake worth around $1.4 billion in the company last year.

Write to Al Root at [email protected] and Adam Clark at [email protected]