Mobileye's stock surges as Intel gives this reassuring sign

By Emily Bary

Mobileye and Intel shares have both been under heavy pressure this year, but Intel says it has no current plans to sell its majority stake, as some had feared

Mobileye Global Inc. shareholders are breathing easier Thursday after the Israeli autonomous driving technology company's majority shareholder confirmed that it has no current plans to sell its interest in the self-driving technology company.

That majority shareholder is Intel Corp. (INTC), which is struggling to get back on track after a series of technological missteps. Intel is also in the midst of a costly bid to regain manufacturing leadership and to serve as a foundry that makes chips for other semiconductor companies.

Intel was said to be considering various options for its business recently, including a possible sale of its Mobileye (MBLY) stake. But the company earlier this week announced a variety of other plans, including turning the foundry business into a subsidiary, and then Thursday it sought to reassure investors on Mobileye specifically.

"As the majority shareholder in Mobileye, Intel has an unwavering focus on value creation and are excited about the future of its business," the company said in a statement posted to its website. "We currently do not have any plans to divest a majority interest in the company."

Mobileye shares are up more than 9% in morning action Thursday.

Read: Intel's stock ranks dead last in the chip sector by this measure

Intel announced in 2017 that it was buying Mobileye, before spinning it out through a 2022 initial public offering. Intel still controls Mobileye thanks to the voting power of the shares it still owns.

Instead of selling its Mobileye stake, Intel will look for other ways to improve its financial position, including moving to "a more normalized cadence of node development and a more flexible and efficient capital plan" after the recent "period of accelerated investment." That's according to a memo from Chief Executive Pat Gelsinger earlier this week.

Intel's stock is off nearly 60% so far in 2024.

Mobileye, meanwhile, had seen its stock crater 73% on the year, through Wednesday's close. The company has had to deal with excess customer inventories and China pressures.

"We believe in the future of autonomous driving technology and in Mobileye's unique role as a leader in the development and deployment of advanced driver assistance systems," Intel said in Thursday's statement.

But "multiple quarters of execution are likely needed to regain confidence near-term," TD Cowen analyst Joshua Buchalter wrote in early August after the company's last guidance announcement.

-Emily Bary

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09-19-24 0947ET

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