Mobileye NV (MBLY) Surging Despite Bearish Call from Citron Research


The shares of Mobileye NV are trading higher today, up by more than 3% to $41.13 per share at the time of this writing around 9;55 AM in New York. The company’s stock price was negatively impacted yesterday (down 7%) after Citron Research called the company “short of the year 2016.”

Mobileye is a pioneer and market leader in Advanced Driver Assistance Systems (ADAS).

Citron questions Mobileye’s competitive position

In September, Citron Research issued a bearish position on Mobileye and set price target of $25 per share (short-term) and below $10 per share (long-term).

According to Citron Research, the valuation and long-term competitive position of the company is uncertain even it has been a leader in supplying ADAS technology on a chip to the auto industry.

The short seller noted that the company does not own a bar-the-competition patent portfolio on ADAS or locked-in-decades supply commitments, and it has no superior technology.  The short-seller warned that investing in Mobileye is a “Hail-Mary bet in a blue-sky future that does not exist.”

Citron Research emphasized that there is nothing in the financials, business performance or realistic future prospects of Mobileye, in the past or present that can justify its valuation ($12 billion) in September.

Mobileye’s market cap is currently around $9.31 billion. The company’s stock fell from its highest trading price of $64.48 per share to its current trading price over the past 52 weeks.

Tesla may discontinue using Mobileye systems for Model S

Tesla Motors is considering to discontinuing using Mobileye’s hardware suite of sensors for the Autopilot system to control the Model S on highways and on some specific road conditions.

According to Bloomberg, Elon Musk approached George Hotz, a software engineer, to help develop the electric car manufacturer’s autopilot system. Hotz is best known for being the first person to hack the iPhone in 2007 and the PlayStation a few years later.

Musk told Hotz, “Frankly, I think you should just work at Tesla. I’m happy to work out a multimillion-dollar bonus with a longer time horizon that pays out as soon as we discontinue Mobileye.”

“I appreciate the offer, but like I’ve said, I’m not looking for a job. I’ll ping you when I crush Mobileye,” replied Hotz.