Mobileye Slashes 2024 Outlook Amid China Market Volatility

Mobileye Global, a leading automotive technology company, has revised its 2024 projections downward, citing unpredictable demand for its driver-assistance chips in China. This announcement comes despite the company's recovery from a global automotive inventory surplus.

The Israel-based firm's shares experienced a sharp decline of approximately 24% in early trading on August 1, 2024, potentially resulting in a market value loss exceeding $4 billion if the trend persists.

While the worldwide auto inventory glut has largely stabilized, weak consumer demand has led to production cuts by carmakers, resulting in fewer orders for Mobileye's chips. The situation is particularly acute in China, where economic challenges have dampened consumer spending on big-ticket items like automobiles.

Amnon Shashua, CEO of Mobileye, addressed the issue during an earnings call, stating:

"China automotive is very, very volatile. It's very difficult to make an accurate forecast. This is why we took... what would be the worst case for 2024... Our guidance does not reflect our optimistic view. It reflects our worst-case view."

The company has adjusted its 2024 shipment volume expectations for its mass-market EyeQ chips to between 28 million and 29 million, down from the previous projection of 31 million to 33 million. Similarly, forecasts for the advanced SuperVision system have been reduced to 110,000 to 130,000 units, compared to the earlier estimate of 175,000 to 195,000.

Tom Narayan, an analyst at RBC Capital Markets, commented on investor focus: "The narrative on Mobileye is more tied to SuperVision than macro. Winning SuperVision is a huge aspect and that's what the stock is trading on... More contracts were supposed to come in H2 and we're already in August, so some investors might be getting a little impatient."

Despite these challenges, Mobileye reported second-quarter revenue of $439 million, surpassing analysts' average estimate of $424.8 million. However, the company has lowered its full-year revenue expectations to $1.60 billion to $1.68 billion, down from the previous forecast of $1.83 billion to $1.96 billion.

It's worth noting that Mobileye, founded in 1999, has been a pioneer in computer vision for automotive safety and has partnerships with over 25 global automakers. The company's technology, including the EyeQ chip and SuperVision system, has been instrumental in advancing driver assistance systems and autonomous driving capabilities.

As Mobileye navigates these market challenges, it continues to work on innovative solutions, including the development of detailed maps for autonomous vehicles and the integration of its technology with smart city infrastructure for improved traffic management.