Why Mobileye Stock Skyrocketed Yesterday

mobileye stockMBLY Stock Gains 28% on Acquisition Deal

Mobileye NV (NYSE:MBLY) stole the limelight on Monday when MBLY stock jumped by almost 28% to close at $60.62.

This was the result of the announcement by Intel Corporation (NASDAQ:INTC) that it will acquire Mobileye for $15.3 billion, or $63.54 per share in cash. The move by the two companies is aimed at accelerating innovation in the self-driving industry.

Mobileye stock has gained almost 59% year-to-date in contrast to the S&P 500 Index, which has gained six percent in the same time period.

Mobileye senior management, in a message to the employees, described the transaction as unique. This is because, instead of Mobileye being integrated into Intel Corporation, Intel’s “Automated Driving Group” (ADG) will be integrated into Mobileye. The objective is for the group to become the leading team in autonomous driving. (Source: “Letter to Employees,” Mobileye NV, March 13, 2017.)

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Mobileye is an expert in developing computer vision systems, and the company had initiated its transition in 2016. From providing front-facing camera technology for advanced driver assistance systems (ADAS), Mobileye is offering a value proposition that includes HD-mapping through crowd-sourcing and 360-degree sensing and fusion.

Mobileye built strong partnerships last year with Bayerische Motoren Werke AG (FRA:BMW), Delphi, and HERE. In January of this year, BMW, Intel, and Mobileye announced that a fleet of about 40 autonomous BMW vehicles will be on roads in the second half of 2017. (Source: “BMW Group, Intel and Mobileye will have autonomous test vehicles on the roads by the second half of 2017,” BMW Group, Intel, and Mobileye, January 4, 2017.)

This would be a good demonstration of the advancements made by the three companies toward fully autonomous driving. Mobileye contributes its proprietary “EyeQ 5” high-performance computer vision processor. In combination with Intel’s CPU and FPGA technologies, EyeQ 5 will form the central computing platform that will be integrated into each autonomous vehicle.

At the Consumer Electronic Show (CES) this year, Intel also talked about its plans to begin capturing and building mapping data from its sensors. At a time when Intel is trying to boost its presence in emerging technologies, the Mobileye acquisition gives the compan a strong boost.

Not only the technology giants, but also the automotive giants are jumping on this autonomous driving technology wagon. In February this year, Ford Motor Company (NYSE:F) had announced its plans to invest $1.0 billion over the next five years in an artificial intelligence (AI) startup called Argo AI. (Source: “Ford InvestS In Argo AI, A New Artificial Intelligence Company, In Drive For Autonomous Vehicle Leadership,” Ford Motor Company, February 10, 2017.)

Ford believes that this AI startup will help the company attain a dominating position in building autonomous vehicles.

The move by Intel could spark off more acquisitions in the autonomous driving space as the different players try to get ahead of one another. In the meantime, MBLY stock shall remain in the spotlight.


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