Intel Corporation (NASDAQ:INTC) spin-out Mobileye shares soared 37% higher on their stock market debut on Wednesday as a dearth of significant tech IPOs in the US worked in its favour.
The stock rose to end at $27.85 on Wednesday versus its IPO price of $21. At the IPO price, Mobileye was valued at $17 billion, albeit significantly lower than the roughly $50 billion valuation Intel had previously hoped for. The maker of technology for self-driving cars was publicly traded before Intel bought the Israeli company in 2017 for $15.3 billion.
Intel will retain control of Mobileye and hold over 750 million shares of Class B stock, which has 10 times the voting power of Class A stock. The company said in an October 18 filing that it expected the offering to be priced between $18 and $20 per share.
READ: Intel eyes significantly lower valuation for IPO of Mobileye unit - WSJ
The IPO raised $861 million, and the move to list Mobileye on the Nasdaq is part of Intel’s broader strategy to turn around its core semiconductor business, which has lagged behind rivals in recent years.
Intel said it would use some funds from the Mobileye listing to build more chip factories as it embarks on a capital-intensive process to become a foundry for other chipmakers.
Founded in 1999, Mobileye has partnered with Audi, BMW, Volkswagen, GM, and Ford to develop advanced driving and safety features such as driver assist and lane-keeping using the company’s “EyeQ” camera, chips, and software.
Mobileye CEO Amnon Shashua said in the IPO filing that 50 companies are currently using the company’s technology across 800 vehicle models. The company's revenue in the second quarter jumped 41% to $460 million, while its net loss narrowed to $7 million from $21 million.
Intel shares were down slightly on Wednesday and have lost about 47% of their value this year.
Contact the author at jon.hopkins@proactiveinvestors.com