Mobileye's Strategic Rebalance: Why Intel's Exit Could Unlock Undervalued Growth Potential

The recent announcement of Intel's secondary offering of Mobileye shares and Mobileye's concurrent $100 million repurchase program marks a pivotal moment for the autonomous driving pioneer. As Intel reduces its stake—a move that could unlock liquidity for shareholders while maintaining strategic control—the interplay of ownership rebalancing, supply chain advancements, and robust financial performance positions Mobileye as a compelling value play. Here's why investors should consider buying the dip at $16.50 per share.

Intel's Exit: A Calculated Move to Monetize Without Losing Control

Intel's sale of 45 million Mobileye Class A shares, with an option for an additional 6.75 million, signals a strategic pivot. The $900 million+ raise from this offering allows Intel to recoup capital while retaining ~82% beneficial ownership and 98% voting control post-conversion of 50 million Class B shares to Class A. This rebalancing avoids dilution concerns, as Mobileye's repurchase of $100 million in shares from Intel at the offering price offsets some of the increased float.

The Class B-to-A conversion further stabilizes governance, ensuring Mobileye's independence while maintaining Intel's stake. This structure addresses investor fears of a full exit while aligning with Mobileye's need for liquidity to fund growth.

Valuation at $16.50: A Discount to Long-Term ADAS/AV Potential

Mobileye's $15 billion valuation at the offering price contrasts sharply with its $1.75 billion revenue guidance for 2025 and projected growth. With a current ratio of 7.64x and a 48.25% gross profit margin, the company boasts strong financial health. Its Q2 2025 revenue of $502–506 million—14–15% year-over-year growth—surpassed consensus estimates by $35 million, underscoring execution strength.

Analysts' median price target of $18 (per recent data) suggests upward momentum if Mobileye maintains its trajectory. Even with a 33.82% year-to-date decline, the stock trades at 16x forward revenue, a discount to peers like Tesla (which trades at ~8x revenue but faces margin pressures) or Waymo (private, but reportedly valued at $140 billion). This gap highlights undervaluation relative to Mobileye's 200+ million vehicles with its EyeQ chips and its leadership in REM mapping and True Redundancy safety protocols.

Supply Chain Strength: TSMC Partnership and Manufacturing Resilience

The TSMC partnership, announced alongside the offering, bolsters Mobileye's supply chain. By diversifying chip production beyond STMicroelectronics, Mobileye ensures capacity for its imaging radar and next-gen EyeQ SOC products. This is critical as demand for ADAS systems accelerates—$140 billion market by 2030, per industry forecasts.

The TSMC deal also mitigates risks tied to geopolitical tensions (e.g., U.S.-China trade frictions) and Intel's chip production constraints. With $104 million in Q2 adjusted operating income, Mobileye is proving it can scale profitably even amid macroeconomic headwinds.

Technical and Sentiment Dynamics: A Buying Opportunity

While Mobileye's shares dipped 3.4% to $18 post-announcement due to increased supply, the $16.50 offering price represents a floor. Analysts like Wells Fargo upgraded their price target to $24, citing the TSMC deal and Q2 outperformance. Retail sentiment on platforms like Stocktwits remains mixed, but technical analysis (via tools like Spark AI) labels Mobileye as “Buy” despite near-term volatility.

Investment Thesis: Buy the Dip, Target $20–24 by YE 2025

The confluence of Intel's disciplined stake reduction, Mobileye's financial resilience, and strategic partnerships creates a compelling entry point. Key catalysts include:
- Q2 earnings on July 24, which could reaffirm growth.
- Volkswagen partnerships ramping in 2026, driving revenue.
- TSMC's capacity expansion enabling scale without margin erosion.

While risks like tariff hikes or Waymo's competitive push exist, Mobileye's RSS safety protocols and REM's data network effects provide durable moats. Investors should accumulate shares near $16.50, with a target of $20–24 by year-end, supported by analyst upgrades and execution milestones.

In a market skeptical of growth stocks, Mobileye's blend of cash flow, strategic moves, and undervaluation makes it a standout opportunity to buy the dip in autonomous driving's next phase.