Mobileye Global nasdaq Mbly Stock Plummets Amidst Revenue Forecast Shock

Mobileye Global (NASDAQ: MBLY) Stock Plummets Amidst Revenue Forecast Shock

Mobileye Global (NASDAQ: MBLY) stock plunged more than 24% on Thursday following the announcement of a full-year revenue forecast that fell well below Wall Street’s projections.

As Israel’s most valuable publicly traded company, specializing in producing semiconductors for driver-assistance systems in vehicles, Mobileye unveiled a preliminary earnings report on Thursday. The report outlined the company’s forecast for full-year 2024 revenue, ranging from $1.83 billion to $1.96 billion. This figure fell well below the average analyst estimate of $2.58 billion.

The Jerusalem-based company, boasting prestigious clients such as Porsche and Volkswagen AG, attributed the downturn to customers trimming orders after stockpiling during the pandemic. Mobileye anticipates a stark 50% drop in first-quarter revenue compared to the previous year.

Mobileye stated in its Thursday release.

“We have become aware of excess inventory at our customers. As supply chain concerns have eased, we expect our customers to use the vast majority of this excess inventory in the first quarter of the year.”

The repercussions of Mobileye’s forecast miss reverberated across the chip industry. Peers, including NXP Semiconductor (NASDAQ: NXPI), STMicroelectronics (NYSE: STM), and Texas Instruments (NASDAQ: TXN), all experienced declines in Thursday’s trading. Intel Corporation (NASDAQ: INTC), which spun off Mobileye in October 2022 but still holds an 88% stake, also saw its stock slide by as much as 3.9%.

Once resilient due to the demand for automotive chips driven by increased electronic functions in vehicles, the chip market now faces uncertainties. The overall slowdown in car demand and signs of a tapering surge in electric vehicle sales, which heavily rely on chips, contribute to the challenges.

Mobileye Global (NASDAQ: MBLY) Downgraded by Wall Street Analysts

Wall Street analysts swiftly downgraded Mobileye Global (NASDAQ: MBLY) in response to the disappointing results. Wolfe Research’s Rod Lache shifted his recommendation from outperform to peer perform, while Brian Gesuale at Raymond James downgraded his rating from solid buy to outperform. Gesuale also adjusted his price target to $48 from $50, expressing concerns that revenue might take longer to materialize than anticipated.

Brian Gesuale wrote in a note,

“The potential for negative estimate revisions could rob shares of a natural catalyst to boost shares sustainably higher in the near term despite a growing expectation that the company is poised to announce incremental customer wins.”

Despite Mobileye’s 24% rise in shares during 2023, closing at $29.97 on Thursday, the recent forecast miss prompted caution among analysts. Among analysts covering the company, 23 have a buy-equivalent rating, four suggest holding, and one recommends selling, with an average 12-month price target of $47.32.