Musk’s Tesla D Intrigue Piques Interest of Mobileye BullsElena Popina
Mobileye NV soared last week to the highest price since going public two months ago after one of its clients, Tesla Motors Inc., indicated it’s on the verge of releasing a new car that could boost sales.
Mobileye, a Jerusalem-based maker of automated-driving technology, jumped 13 percent in the week ended Oct. 3 in New York. Much of that rally came on the last two trading days after Tesla Chief Executive Officer Elon Musk said on Twitter on Oct. 1 that it was “about time to unveil the D and something else,” showing a photo of a car peeking from behind a garage door with a stylized D on it.
The post stoked speculation that Musk would present a new vehicle to follow his Model S luxury sedan at an Oct. 9 event. The company will make its first foray toward automated driving, a person familiar with the carmaker’s plans said on Oct. 3, with high-tech features including one that can keep the car in its lane. Mobileye’s anti-collision technology is likely to be part of Tesla’s new product, said Trip Chowdhry, an analyst at Global Equities Research.
“Mobileye possesses the world’s leading technology that protects from collision, and it looks like this collision avoidance system will be in Tesla’s new model S,” Chowdhry, who conducts research on more than 30 of Tesla’s suppliers, said by phone from San Francisco on Oct. 3. “There is a lot of hype around Tesla ahead of next week’s presentation, and this is creating an upside for Mobileye.”
Mobileye shares surged to $57.70, posting the biggest weekly gain in the Bloomberg index of the most-traded Israeli companies in the U.S. The gauge rose 1.9 percent for the week for its biggest gain since August. Shares of Tesla, based in Palo Alto, California, rose 3.5 percent to $255.21.
The TA-25 Index, which lost 0.3 percent last week, gained 0.8 percent to 1,464.06 this week as of 1:41 p.m. local time.
Mobileye, which counts Goldman Sachs Group Inc. among its main shareholders, has more than doubled since its Aug. 1 trading debut. The company, which counts General Motors Co. and Bayerische Motoren Werke AG among its customers, has leaped from a $1.5 billion valuation in July 2013 to $12.2 billion today, data compiled by Bloomberg show. Its $1 billion initial public offering on July 31 was the biggest in the U.S. by an Israeli company, according to the data.
Brands such as Daimler AG’s Mercedes-Benz and Honda Motor Co.’s Acura feature driver-assist tools like adaptive cruise control, which adjusts the car’s speed to maintain a safe distance behind slower vehicles. Tesla’s Model S initially didn’t include some high-tech safety features such as lane-keep assist.
Yonah Lloyd, a spokesman for Mobileye, declined to comment on the trading.
Founded in 1999 by Hebrew University professor Amnon Shashua and Ziv Aviram, Mobileye makes a chip and a system that alert drivers to pedestrians and unintended lane departures. The company’s products will help enable hands-free driving on the highway by 2016, according to a July filing. Its image-sensing technology stands apart from competitors because it uses a single camera to capture and display a vehicle’s surroundings, Jason Ader, an analyst at William Blair & Co., said last month.
Tesla is adding electronic features that help drive the car, reducing the strain of traffic congestion. The automaker last month began installing cameras in the Model S, including a forward facing one behind the windshield, that will enable safety technology required by European regulators, Simon Sproule, a company spokesman, said in an interview last week. He declined to confirm the specific safety features ahead of Tesla’s announcement.
Ravi Shanker, an analyst at Morgan Stanley who in an August report predicted that Mobileye’s shares could reach $100 under the most optimistic scenario, reiterated a similar prediction last month, saying the company might be challenged by rivals.
“The path to MBLY achieving dominance in the vision space is unlikely to be straight or smooth,” Shanker said in a Sept. 15 report.
The company will be able to reach $100 or more if it closes the gap between about 200 car models in which Mobileye’s driver assistance system is present and 1,100 models worldwide, he said. As of March 31, Mobileye’s technology was installed in about 3.3 million cars made by manufacturers from Honda Motor Co. to Tesla, the company estimates.