Mobileye Gross Profit Grew In Q3, But It Is Undervalued

Summary

• Mobileye’s GAAP losses increased because research and development increased by 56% to 46% of sales. High sales growth and high research and development have characterized this company.
• Fourth quarter profitability will increase by $25 million to $45 million, bringing GAAP profitability to about breakeven and full year sales to about $1.8 billion, twice 2020 revenue.
• Mobileye sales are almost all driver assist. It is aiming to produce a fully autonomous car, and it is making progress toward that end.
• It has limited competition. Contracts with 13 of the 15 top automobile companies demonstrate its strength. It is a strong buy.

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Investment Thesis

The market for driver assist and self-driving cars is huge and growing rapidly as new technology makes these cars more practical. This rapid growth and a strong market position should make Mobileye (NASDAQ:

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.