Mobileye Is Now A Strong Buy

Summary

• Mobileye, a leader in ADAS and autonomous driving, partners with major automakers and holds a significant market share, positioning it for massive growth.
• Despite a 50% stock drop this year, recent earnings show rapid business expansion and potential for substantial recovery, possibly doubling within a year.
• Mobileye's growth prospects include $2 billion in sales next year, 20-30%+ sales growth, and the potential for a significant short squeeze due to improving fundamentals.
• Risks include competition, macroeconomic challenges, and potential technology setbacks, but Mobileye's strong market position and growth potential make it a compelling investment.

Mobileye Global Inc. (NASDAQ:MBLY) is a global leader in advanced driver assistance systems "ADAS," and autonomous driving technologies. The company operates vision-based ADAS. Moreover, its EyeQ technology integrates computer vision and machine learning, enabling Mobileye to leverage its AI capabilities to further improve its position in this ultra-lucrative space.

Mobileye has formed key partnerships with industry heavyweights like BMW, Volkswagen, Ford, Geely, Nissan, and others. Remarkably, Mobileye supports roughly 50% of the global ADAS market share, with its EyeQ chips in about one out of every three new vehicles.

The future of driving is autonomous, and given Mobileye's unprecedented market positioning, the company is positioned for massive growth ahead. This dynamic became more evident when Mobileye reported its earnings recently.

Despite the uncertain environment, Mobileye delivered a solid 83% YoY revenue increase and reaffirmed full-year guidance. This was a welcome development considering that the company's previous earnings were perceived as soft.

Mobileye One Year Chart

Given the recent volatility, Mobileye has been one of the worst-hit stocks, declining by roughly 50% since the start of the year. If we go back to its post IPO-high of around $48, Mobileye was down by about 77% off its highs during its worst. However, Mobileye may be around a significant low point here, and the recent earnings announcement changes everything, in my view.

It illustrates that Mobileye's business is expanding rapidly, and the company should post considerable growth despite the slower economic atmosphere. On the back end, the company has considerable growth prospects and positive headwinds due to the increasing autonomous trends in the automotive market.

In addition, Mobileye's business goes beyond cars, and the company's systems may be implemented across wide industries in future years. The company should deliver more than $2 billion in sales next year, and 20-30%+ sales growth could continue beyond that.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of MBLY either through stock ownership, options, or other derivatives. 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.