One of the biggest movers in today’s market, and a stock that many are keeping a close eye on, is Mobileye (NASDAQ:MBLY). This maker of advanced driving and driver assist technology is once again publicly-listed, following its highly-anticipated initial public offering (IPO) today. Currently, MBLY stock is up more than 30% on its debut, signaling interest in this company’s technology has exceeded initial expectations.
Intel (NASDAQ:INTC) acquired this Israel-based company in 2017 for $15.3 billion, in a bid to diversify its business into other high-growth chip-related areas. However, with significant capital investments needed to build out new chip manufacturing facilities, Intel has decided to spin out its Mobileye division to raise cash.
The company initially planned on listing shares in the $18-$20 range yesterday. However, following strong investor demand, Intel brought MBLY stock public today at $21 per share, a dollar above its initial range. This resulted in Mobileye generating a valuation of around $17 billion. While that’s still more than what Intel paid five years ago, it appears the market would have accepted a higher IPO price.
Let’s dive into what investors may want to consider with respect to Mobileye right now.
Is MBLY Stock a Buy Following Its Hot IPO?
Undoubtedly, Mobileye’s core technological focus on advanced driving and driver assist technology is one that will garner significant attention among investors. The fact that Intel went out and bought this company directly indicates the long-term view many investors appear to want to take with owning shares of MBLY stock.
Indeed, the number of IPOs that actually see the light of day in this market has dwindled substantially. Many experts have cited a closed-down IPO market as a sign that investor sentiment remains extremely bearish. Thus, Mobileye’s impressive opening today may indicate just how valuable the company’s underlying technology is.
For both Intel and Mobileye, today’s spinoff appears to be the best outcome for both companies. Intel receives much-needed growth capital to achieve its capital spending ambitions. And investors looking for a way to play the future growth of advanced driver assist technologies can do so with MBLY stock.
Moving forward, I think MBLY stock will likely be more attractive to growth investors than INTC stock, for obvious reasons. However, the capital infusion Intel received as a result of this deal is one that could improve its fundamentals, albeit slightly. Thus, perhaps both stocks should be on investors’ shopping lists right now.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
