Mobileye (NASDAQ:MBLY) stock is down a little over 1% today on news that Intel (NASDAQ:INTC) is selling a 35 million share stake in the self-driving tech company, worth roughly $1.4 billion. Why is the chipmaker backing out of spun-off Mobileye?
Well, artificial intelligence (AI) fever seems to have caught the chipmaker’s attention more so than its once-prodigal auto tech business. Specifically, Mobileye announced that Intel is going forward with a secondary stock offering of part of its Class A stock ownership in MBLY.
Indeed, according to reports, Intel is capitalizing on some of the profits it has earned from the spun-off company since it listed Mobileye about nine months ago.
If you recall, Intel listed Israel-based Mobileye for a value of almost $16 billion last October, well below estimated valuations of the company, which came to around $50 billion at the time. Intel owns 99.3% of the voting shares in Mobileye, although that will drop to about 98.7% after the stock sale is completed.
Since the spinoff, Mobileye’s market capitalization has soared up to around $34 billion, driven in no small part by the AI wave.
MBLY Ticks Lower on Intel Stock Sale
Despite today’s Intel-related losses, MBLY stock is still up quite a bit over its lifetime. Mobileye shares are up more than 25% year-to-date (YTD), which makes up a large part of its 54% lifetime gains.
Intel, on the other hand, has had a bumpier time. INTC stock is down about 28% over the past one year. Meanwhile, the Nasdaq Composite logs a gain of about 10% over the same period. Even compared to other chipmakers and major semiconductor indices, Intel stock has underperformed of late. That said, investors clearly see promise in its secondary stock sale. INTC stock is up more than 3% heading into the afternoon.
Interestingly, Intel’s sale of MBLY comes just as other chipmakers begin to invest in their own self-driving technologies. Indeed, companies like Nvidia (NASDAQ:NVDA) and Qualcomm (NASDAQ:QCOM) have each explored their own proprietary footings in the space.
Mobileye still has some impressive clientele however, with customers including BMW (OTCMKTS:BMWYY), Nissan (OTCMKTS:NSANY) and Volkswagen (OTCMKTS:VWAGY).
On the date of publication, Shrey Dua did not hold (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.
