Mobileye Global Cuts Annual Revenue and Profit Forecasts Due to Sluggish Demand and Shares Plummet Over 24% Amid Economic Uncertainty in China
Fiona Nanna, ForeMedia News
3 minutes read. Updated 1:14AM GMT Fri, 2August, 2024
Mobileye Global Inc. (MBLY.O), the Israel-based leader in automotive technology, has sharply revised its annual revenue and profit forecasts following a significant downturn in demand for its driver-assistance chips, particularly in China. The company’s shares plummeted by over 24% in early trading, placing it on track to potentially lose more than $4 billion in market value if the losses persist.
This adjustment comes as Mobileye continues to grapple with the repercussions of a global auto inventory surplus, which had previously led to a sales slump. Despite a recovery from the inventory glut, the company is now facing reduced orders due to weakened consumer demand and ongoing production cuts by car manufacturers.
The situation is exacerbated by a frail Chinese economy, which has led to decreased consumer spending on big-ticket items. As a result, Chinese automakers have reduced their orders from Mobileye. Data from the China Passenger Car Association reveals that car sales in China dropped by 2.9% in June.
“China’s automotive market is highly volatile, making accurate forecasting challenging,” said Mobileye CEO Amnon Shashua during an earnings call. “Our revised guidance reflects the worst-case scenario for 2024 rather than our more optimistic outlook.”
Mobileye has adjusted its shipment volume expectations for its mass-market EyeQ chips to between 28 million and 29 million units for 2024, down from the previous estimate of 31 million to 33 million units. Additionally, forecasts for its advanced SuperVision system, which has garnered significant investor interest, have been reduced to between 110,000 and 130,000 units, down from 175,000 to 195,000 units.
RBC Capital Markets analyst Tom Narayan noted, “The market’s focus on Mobileye is heavily tied to the SuperVision system. The anticipation of more contracts in the latter half of the year has yet to materialize, leading to investor impatience.”
For the full year, Mobileye now anticipates revenue between $1.60 billion and $1.68 billion, a reduction from the earlier forecast of $1.83 billion to $1.96 billion. This revised outlook falls short of analysts’ estimates of $1.87 billion, according to LSEG data.
Despite these challenges, Mobileye reported second-quarter revenue of $439 million, exceeding the average analyst estimate of $424.8 million.
