In a sign of the times, one of the biggest IPOs for 2022 is launching with a much smaller-than-expected market cap.

Mobileye Global (MBLY), Intel’s autonomous driving subsidiary, hit the Nasdaq on Wednesday. At the close of markets on Tuesday, Mobileye was reported to release 41 million shares at $21 per share. With that price point, Intel will raise $861 million at a valuation of roughly $17 billion. Although roughly one billion higher than last week’s estimates, the valuation is well below the $50 billion target Intel proposed when the listing was announced in December last year.

Considering the unfavorable market conditions, Mobileye will only release 5% of its basic shares outstanding. Intel will retain majority ownership of the firm. This year’s market is far from ideal for blockbuster IPOs, but Intel is reportedly strapped for the cash it needs to build out new chip-making facilities for its core business. Depending on the success of the IPO and Mobileye’s performance going forward, the discounted offering could deliver big returns for early-bird investors.

Founded in 1999, Israel-based Mobileye has been innovating advanced driver-assistance systems (ADAS) and self-driving solutions for over two decades. Intel acquired Mobileye in 2017, and the subsidiary has clocked impressive revenue growth since. Total sales rose from $879 million in 2019 to $1.39 billion in 2021.

Mobileye’s set of core enterprise customers is expanding too. Last year, 78% of revenue came from sales to four automakers. That number doubled in 2022, with 76% of its sales stemming from eight car manufacturers.

Mobileye’s main business remains its customized EyeQ chips. Having been improved over five generations since 2007, the chip series minimize power consumption and optimize processing power for assisted driving systems.

Mobileye also provides dual-source sensing that combines camera-based and Lidar (Light Detection and Ranging) systems for an enhanced all-around view of the vehicle. It also has software solutions to complement its hardware, such as precision mapping systems backed up by the firm’s own crowd-sourced data set.

The company has ambitions to become a dominant enterprise provider for robotaxi and automated delivery fleets. It aims to capture the expected growing demand for this secondary market in the years to come and deliver solutions it calls “Autonomous Mobility as a Service” (“AMaaS”).

Despite its enormous potential, Mobileye faces stiff competition in the sector. Nvidia and Qualcomm are pioneers in autonomous driving systems, while well-established brands like Sony, Tesla, and Apple seek to dominate self-driving consumer vehicles. Mobileye will need to keep ahead of the pack to maintain its impressive growth streak going forward.

Mobileye’s public listing marks a clear departure from the eye-popping IPOs of yesteryear. Yet, investors could nonetheless find it very palatable.

Tastes have changed amid the market downturn this year, with a clear “pivot to profit” as investors shift from growth-at-all-costs stocks and buy up firms with proven business models. As a mature, profit-generating company that remains under the management of a veteran American tech titan, Mobileye may just fit the bill.

This post was produced and syndicated by Wealth of Geeks.

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