Mobileye Plunges as Full-Year Revenue Forecast Falls Short

(Bloomberg) -- Mobileye Global Inc. shares fell as much as 29% after the Israeli autonomous driving technology maker gave a full-year revenue forecast that fell far below Wall Street’s expectations.

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Israel’s most valuable publicly traded company, which makes semiconductors for driver-assistance systems in vehicles, said in a preliminary earnings report Thursday that it expects full-year revenue in 2024 of $1.83 billion to $1.96 billion, much less than the average analyst estimate of $2.58 billion.

The Jerusalem-based company, which counts Porsche and Volkswagen AG among its customers, blamed the lowered forecast on customers paring back orders after stockpiling during the pandemic. It anticipates first-quarter revenue to also be down about 50% from a year earlier.

“We have become aware of excess inventory at our customers,” Mobileye said in its statement Thursday. “As supply chain concerns have eased, we expect that our customers will use the vast majority of this excess inventory in the first quarter of the year.”

The selloff had ripple effects across the chips industry. Peers, including NXP Semiconductor NV, STMicroelectronics NV and Texas Instruments Inc. all fell during Thursday trading. Intel Corp., which spun off the firm in October 2022 but still retains about an 88% stake, saw its stock slide as much as 3.9%.

Read More: Chip Market Troubles Pose Threats After AI Euphoria

Demand for automotive chips had held up stronger than other parts of the electronics industry, helped by the addition of more electronic functions in each vehicle. That may no longer be enough to support high levels of chip shipments as overall demand for cars slows and the surge in sales of electric vehicles — which require even more chips - shows signs of abating.

Mobileye’s results triggered downgrades from Wall Street analysts. Wolfe Research’s Rod Lache cut his recommendation to peerperform from outperform. Brian Gesuale at Raymond James lowered his rating to outperform from strong buy and trimmed his price target to $48 from $50, saying revenue may take longer to materialize than Wall Street expects.

Read more: Mobileye Plummets 28% After Rev Forecast Misses Estimates

“The potential for negative estimate revisions could rob shares of a natural catalyst to boost shares sustainably higher in the near term despite a growing expectation that the company is poised to announce incremental customer wins,” he wrote in a note.

Mobileye shares rose 24% in 2023, and closed on Wednesday at $39.72. Of analysts covering the company, 23 have a buy-equivalent rating, four say to hold and one recommends selling. The average 12-month price target is $47.32.

--With assistance from Ian King and Mark Tannenbaum.

(Updates with additional details from second paragraph)

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