Is Mobileye Destined To Go The Way Of 3D Printing Stocks?

Related Tickers: MBLY, GPRO, AMBA

  • Shares of leading driverless car technology company, Mobileye, have been selling off heavily after Citron Research released a bearish report about the company.
  • Citron raised several pertinent issues about Mobileye, including the apparent overvaluation of the shares, growing competition, and minimal R&D spending.
  • A deeper look at the Citron report, however, reveals that it contains some serious flaws that discount the bear thesis.

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Shares of leading driverless car technology Mobileye (MBLY) have been selling off heavily since buy-side analysts Citron Research issued a damning report about the company short-term and long-term outlooks.

Since Citron released the shares on Sept. 9, Mobileye shares are down close to 13% and still falling.

 

MOBLY-1

 

Source: CNN Money

In its report, Citron Research raised the following salient points about Mobileye:

Mobileye stock sports an absurd valuation

Mobileye shares sport a Price-to-Sales of 66. In comparison, tech companies with significant exposure to driverless car technology sport much lower valuations. For instance, Nvidia (NVDA) and Marvell Technologies (MRVL) sport low PS ratios of just 2.20 and 1.83, respectively.

 

MOBLY-2

Source: Citron Research

Further the company pointed out that Mobileye stock would find it hard to grow into its stratospheric valuation even if the company maintains a high revenue growth of 50%-60% over the next two years.

For good measure, Citron pointed out that while Mobileye might maintain high growth rate over the next two years, the fact that it no longer owns a monopoly in ADAS (Advanced Driver Assistance Systems) due to increasing competition from companies such as Bosch, Continental, and Delphi will make it hard to maintain high growth rate over the medium-and long-term. Moreover, companies such as Denso and Autloliv that formerly partnered with Mobileye for ADAS have already started supplying their own ADAS products.

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Charles Howard 5 years ago Member's comment

I don't think that comparison is relevant in this case. It has a lot more juice than $DDD.