Intel "debunks" rumors of equity divestment, Mobileye surges nearly 8% in pre-market trading
Intel said on Thursday that it has no plans to divest the majority of its stake in Mobileye. Mobileye's stock price rose more than 10% in pre-market trading and ultimately increased by nearly 8%. Intel emphasized its commitment to value creation and expressed excitement about Mobileye's future. Earlier reports suggested that Intel was considering selling part of its stake, leading to a significant drop in Mobileye's stock price. Mobileye's stock price has fallen by over 70% so far this year
According to the financial news app Zhitong Finance, Intel (INTC.US) stated on Thursday that it currently has no plans to divest the majority of its stake in the autonomous driving company Mobileye (MBLY.US). Mobileye's stock surged more than 10% in pre-market trading at one point, and as of the time of writing, the stock has risen nearly 8%, while Intel's stock has risen 2% in pre-market trading.
Earlier this month, foreign media reported that Intel was considering selling part of its stake in Mobileye, which caused a significant drop in Mobileye's stock price. Mobileye's stock price has fallen by over 70% so far this year.
In a statement, Intel said, "As a major shareholder of Mobileye, Intel is firmly focused on value creation and excited about the future of its business." "We currently have no plans to divest the majority of the company's shares. By separating Mobileye and providing autonomy, the company is able to enhance its ability to capitalize on growth opportunities and accelerate progress towards creating greater value. We believe in the future of autonomous driving technology and the unique role of Mobileye as a leader in the development and deployment of advanced driver assistance systems (ADAS)."
Wall Street analysts have reacted slightly positively to this move.
In 2017, Intel acquired Mobileye for $15.3 billion, but five years later, the autonomous driving company went public again through an IPO, with Intel divesting some of its stake in this listing, raising $861 million. According to Mobileye's annual report, as of December 30th last year, Intel held approximately 88.3% of the company's common stock.
Mobileye has been focusing on addressing fluctuations in demand for its driver assistance chips. Due to weak international market demand, the company lowered its annual revenue and profit expectations in August.
Intel has also been trying to turn around its business by focusing on its chip manufacturing division and artificial intelligence processors. However, in recent months, the company's stock price has plummeted due to layoffs, dividend suspensions, and the resignation of a high-profile board member.
Intel CEO Pat Gelsinger released several statements earlier this week, including suspending factory construction in Europe to support the company's financial and technological strength in response to shareholder pressure over the stock price decline.
However, Intel announced a chip manufacturing agreement with Amazon's (AMZN.US) cloud computing division on Monday, which may give Intel's manufacturing business some momentum as the tech giant aims to compete with rivals like TSMC (TSM.US)