Self-driving technology company
Mobileye
reported a disappointing quarter, cutting full-year financial guidance. The electric-vehicle price war, being led by
Tesla,
is the main reason.
Mobileye
(ticker: MBLY) shares were down significantly in early trading, falling 14.4%.
S&P 500
and
Nasdaq Composite
futures were up 0.5% and 0.9%, respectively.
The company on Thursday morning reported first-quarter adjusted earnings per share of 14 cents from $458 million in sales. Wall Street was looking for about 12 cents a share and $454 million in sales. Current results aren’t the problem. It’s the guidance.
Mobileye now expects to generate full-year operating profit of about $560 million from sales of just under $2.1 billion. Wall Street is looking for $600 million and $2.2 billion, respectively. Mobileye’s prior guidance, given in January, called for about $600 in operating profit from $2.2 billion in sales.
“The China electric vehicle market has been negatively impacted by meaningful pricing actions by a global EV OEM, reduction of government electric vehicle subsidies, and general economic weakness in the country,” reads part of Mobileye’s earnings news release. “While order flows for our main current customer for SuperVision have improved in recent weeks, given the impact they have seen in Q1 and revised outlook for the year, we are updating our 2023 fiscal year guidance to reflect this development.”
SuperVision is the name for Mobileye’s most advanced driver assistance product, capable of providing hands-off driving experiences. (Drivers must still pay attention even if the car is steering.)
The bottom line is that price wars have consequences. As pricing comes down car makers have to cut costs somewhere, which seems to be affecting the adoption of more advanced driver-assistance technologies.
The unnamed EV OEM is most likely
Tesla.
The main SuperVision customer likely isn’t Tesla. Mobileye didn’t immediately respond to a request for comment.
How EV pricing can affect self-driving cars is an unexpected, unwelcome surprise for investors.
Tesla has cut prices several times for its vehicles around the world in recent month. The cuts led to market share gains, but it also hurt Tesla’s operating profit margins.
Tesla shares are down about 15% since the company reported weaker-than-expected profit margins on April 19.
Coming into Thursday trading, Mobileye stock is up about 23% so far this year.
Write to Al Root at [email protected]
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