Mobileye shock absorbers with bottom guide. The stock plunges. Blame Tesla.

[ad_1]

Autonomous technology company Mobileye reported a disappointing quarter, slashing its full-year financial forecast. The electric vehicle price war, led by Tesla, is the main reason for this.

Shares of Mobileye (ticker: MBLY) fell significantly in early trading, falling 14.4%. S&P 500 and Nasdaq Composite futures rose 0.5% and 0.9% respectively.

The company announced Thursday morning adjusted earnings per share of 14 cents for the first quarter, on revenue of $458 million. Wall Street was looking for about 12 cents per share and $454 million in sales. Current results are not the problem. It’s management.

Mobileye now expects to generate a full-year operating profit of around $560 million on sales of just under $2.1 billion. Wall Street is looking for $600 million and $2.2 billion, respectively. Mobileyes’ earlier forecast, given in January, called for about $600 in operating profit on $2.2 billion in sales.

The Chinese electric vehicle market has been negatively impacted by significant pricing actions by a global electric vehicle OEM, the reduction of government subsidies for electric vehicles and the country’s general economic weakness, reads the press release on Mobileyes results. While order flow from our current major customer for SuperVision has improved in recent weeks, given the impact they saw in the first quarter and a revised outlook for the year, we are updating our guidance for 2023 to reflect this change.

Advertising – Scroll to continue

SuperVision is the name of Mobileyes most advanced driver assistance product capable of delivering hands-off driving experiences. (Drivers should always be careful even if the car is turning.)

The bottom line is that price wars have consequences. As prices fall, automakers have to cut costs somewhere, which seems to affect the adoption of more advanced driver assistance technologies.

The unnamed OEM EV is most likely Tesla. SuperVision’s main customer is probably not Tesla. Mobileye did not immediately respond to a request for comment.

Advertising – Scroll to continue

How EV pricing may affect self-driving cars is an unexpected and unwelcome surprise for investors.

Tesla has repeatedly cut prices for its vehicles around the world in recent months. The cuts led to market share gains, but they also hurt Tesla’s operating profit margins.

Tesla shares are down about 15% since the company announced lower-than-expected profit margins on April 19.

Advertising – Scroll to continue

At the start of Thursday’s session, Mobileye stock is up about 23% so far this year.

Write to Al Root at [email protected]

[ad_2]