Intel Corporation (NASDAQ:INTC) is likely to see a significantly lower valuation than previously expected for the IPO of its Mobileye Global Inc self-driving car unit, according to people familiar with the matter, the Wall Street Journal (WSJ) has exclusively reported.
Mobileye, which was originally expected to land a roughly $50 billion valuation, is now set to target one that is under $20 billion and sell a smaller number of shares than originally planned, the US newspaper said. By selling fewer shares at a lower price, the company and its advisers are hoping to drum up interest that will push up the shares after they start trading.
In another sign of the challenges facing the offering, Mobileye plans to launch its roadshow for prospective investors on Tuesday, a day later than anticipated. The goal is still for the shares to begin trading on October 26, the sources told the WSJ.
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The deal is a test of the IPO market, which has been hit hard by rising inflation and interest rates, fears of a recession and plummeting stock prices, especially for Mobileye’s technology-company peers.
While most companies have delayed their public offerings until next year, Mobileye was one of the biggest and well-known exceptions.
Intel chief executive Pat Gelsinger has said that listing Mobileye would give the self-driving car unit a higher profile and attract more business. He has also said Intel does not need the money Mobileye’s IPO would generate, the WSJ noted.
Intel will retain a large stake in Mobileye, including all of the Class B shares Mobileye plans to issue, it has disclosed. Each Class B share will have voting rights equivalent to 10 Class A shares.
Mobileye had $854 million in revenue for the first six months of its fiscal year, up 21% from the year-earlier period. The company had a net loss of $67 million.
It is the second IPO in less than a decade for Mobileye, which first went public in 2014 at a roughly $5 billion valuation. Intel acquired the Israeli company in 2017 for $15.3 billion. Goldman Sachs and Morgan Stanley are leading the offering.
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