Mobileye stock rises 40% in its return to a public market in chaos

It’s impossible to raise the dead. But Mobileye's Wednesday IPO demonstrates that the market to list public companies hasn't lost all of its vital signs just yet.

Mobileye stock had a nice first day, rising nearly 40% to close at $28.97. The Intel-controlled company sold roughly $860 million worth of stock at the IPO and sold an additional $100 million to General Atlantic. It priced the issue at $21, a dollar above the top end of the $18 to $20 a share it was hoping to get.

Intel CEO Pat Gelsinger was careful not to call Mobileye's return to the public markets a capital raise at an event earlier this week, describing it instead as a decision designed to move it into the market.

There’s truth to what Gelsinger is saying: The original reason Intel planned the IPO was for financial engineering — to unlock for Wall Street the value in the fast-growing autonomous driving unit while the rest of Intel figures out how to correct years of dysfunction. Two separate stocks, but still one company (Intel controls Mobileye still).

Intel had once hoped to bank a valuation of $50 billion but later revised that down to $30 billion before settling on the roughly $20 billion market value that it actually managed to achieve. For context, Intel bought the then-public Mobileye for $15.3 billion in 2017.

In a lot of ways, Mobileye’s was a textbook IPO for Wall Street. Mobileye ticked all of the boxes a banker would need to in order to achieve a successful offering in previous years, including lots of investor interest during the road show, pricing above the range, a healthy pop on the first trading day.

The market has changed this year. IPOs have dried up, with the amount of cash raised plummeting to the point where Renaissance Capital called 2022 the slowest in the firm’s history. Mobileye listed at a time of uncertainty — among chip companies themselves but also the broader economy.

But it doesn’t really matter how much Mobileye is worth on paper to Intel. The veteran chip manufacturer set up the IPO so Intel would receive a $3.5 billion dividend from the proceeds. But because the valuation was much lower than anticipated, Intel will receive less cash than it once hoped.