Mobileye Stock Reels From Inventory Glut, Forecasts 50% Q1 Sales Drop
Shares languish near 52-week lows after the company warned that customers stockpiled its EyeQ chips, leading to a dramatic cut in its 2024 outlook.
Mobileye Global Inc. (MBLY) is grappling with a severe inventory glut among its key customers, a development that prompted the autonomous driving technology firm to issue a stark warning for 2024 and sliced its market value by nearly a quarter in a single day.
The Intel subsidiary, which specializes in camera-based advanced driver-assistance systems (ADAS), saw its stock plunge approximately 25% on January 4 after it revealed that an excess buildup of its EyeQ chips at Tier 1 automotive suppliers would cause a dramatic short-term drop in demand. The company projects first-quarter revenue will plummet by nearly 50% compared to the same period last year.
The disclosure sent shares to their lowest point since November 2022 and wiped out billions in market capitalization. The stock has since struggled to recover, trading near its 52-week lows as investors digest the scale of the disruption.
In its preliminary announcement on January 4, Mobileye shocked Wall Street by forecasting full-year 2024 revenue in the range of $1.83 billion to $1.96 billion, far below the roughly $2.6 billion analyst consensus at the time. The company also projected a full-year operating loss for 2024. The news led to a flurry of analyst downgrades from firms including Bank of America and Wolfe Research, according to reports from Investopedia.
When the company delivered its official fourth-quarter 2023 results on January 25, the numbers were largely a formality, with the market's focus firmly on the bleak year ahead. While Q4 revenue grew 13% year-over-year to $637 million, as detailed in the company's press release, the performance was entirely overshadowed by the forward-looking guidance.
Mobileye's management attributed the inventory problem to a classic 'bullwhip effect' stemming from the global supply chain crisis. Customers aggressively over-ordered chips in 2021 and 2022 to safeguard against potential shortages. "Decisions by our customers to build inventory in prior periods, which we believe was a reaction to the supply-chain constraints of 2021 and 2022, will lead to a significant reduction in shipments of our most advanced products in the first half of 2024," the company stated.
This inventory correction is expected to heavily impact the first quarter, after which the company anticipates the destocking will moderate. Mobileye has indicated it believes customer inventories will return to normal levels by the end of the year, suggesting the issue is one of timing rather than a fundamental decline in end-market demand.
Still, the episode highlights the company's vulnerability to the complex automotive supply chain and shifting production schedules at major car manufacturers. The slowdown in the electric vehicle market has also created uncertainty for suppliers of high-end technology like Mobileye's.
Despite the near-term crisis, Mobileye is pushing forward with its next-generation platforms, SuperVision and Chauffeur, which offer more advanced hands-off driving capabilities. The company argues that the long-term trend toward greater vehicle autonomy remains intact. However, for investors, the focus remains squarely on how quickly the company can navigate the current inventory storm and steer back toward the growth trajectory it had previously promised.