Saul
Do you have an opinion on MBLY? This morning I bought some when it went down 6% after being up 6%.
Thanks
Robert
Hi Robert,
I had done some research on them. They have leading edge technology. Their technology is finding its way into most know car brands. And they have very little direct competition in the area. They are led by a strong team of scientists and business people. The founders and venture capital folks who provided early funding still own lots of shares. All of these things looked great.
My only concern is the valuation. This is like a 10B dollar company. It would need to grow into the valuation. So I decided to write puts as a way to share ownership. I haven’t yet gone through this quarter’s report. I will buy some shares if progress looks great.
Anirban.
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Anirban & Robert,
Progress is great. Have small position in a child’s account. I put this post on the RB:TSLA board where J.Sergeant mentioned them.
http://discussion.fool.com/1069/john-earnings-were-huge-total-re…
FWIW,
KLVanLiew
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Eventually this will probably turn out too be a commodity business with low margins. See the INVN story. Lots of sales not as much profit. A supplier to other companies not a company that can use branding on consumers. Since automated driving is hot now (just as MEMS were) hold with caution. Get out before it cools since there seems to be a minimal moat here. BWDIK, no specific expertise here.
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I spent a bit of time looking at them in September when they were around $50
http://discussion.fool.com/mobileye-31431180.aspx
There’s not a lot wrong with the story and they are a growth stock that’s definitely growing. There are no firm conclusions on whether to chance a buy and at what price. It’s an irrational decision. You can’t justify paying even a forward 2020 PE of 68. Currently the GAAP PE is negative
The stock may fly for awhile as the uptake for the chips is fast and the market just now seeing increased penetrance. But there is a cap on growth and that’s going to depend on how many cars are made and sold in a year and that’s not a limitless market. This is one to find an OK entry an get out before the growth hits the ceiling. At $44 it’s slightly more interesting than it was at $50
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Eventually this will probably turn out too be a commodity business with low margins. See the INVN story. Lots of sales not as much profit. A supplier to other companies not a company that can use branding on consumers. Since automated driving is hot now (just as MEMS were) hold with caution. Get out before it cools since there seems to be a minimal moat here. BWDIK, no specific expertise here. - mauser96
I have to ask…on what do you base that opinion? I’m not going to say it’s a good investment because, as Saul pointed out, the valuation seems to be questionable. However, they aren’t selling a camera that anyone can easily duplicate. They’re selling a system that has most of its value in the software that would take anyone else years to just get to what they have today, and they’ll no doubt improve it as time goes on. The software can recognize and read road signs in numerous countries, among other functions it can do. While I’m skeptical that self-driving cars are that close, I do think accident prevention and some driver assistance will be hot in the near future. I still can’t figure out that nearly $10B market cap though. When I first saw it I thought maybe the company was established in other products, but it really doesn’t seem to be the case.
Steve
2 Likes
Steve everybody said the same things about INVN too. , and multiple other supplier type companies. MEMs are cool and definitely high tech bit they could be duplicated. So can cameras,
.Buy companies like this early or be very careful. It’s hard to get them early because they are usually private at that point.Maybe the stock will go up but it’s not for me. They have no sustainable compensative advantage.
Hi VanLiew,
Progress is great. Have small position in a child’s account. I put this post on the RB:TSLA board where J.Sergeant mentioned them.
Yes, agreed they had a good quarter, but this still looks like very rich pricing. I had a quick look at the earnings release. They have done about $104M revenue in 9 months. They will probably get to $150M by the end of 2014. That would still put them at 60x sales. That’s pretty steep, although it’s hard to tell what would be an acceptable multiple for a company like this.
These guys have great margins (about 70% gross margin). I was thinking of comparing with Gentex, which makes auto-dimming mirrors for cars and is the leader in that space. Gentex is of course more mature and it will roughly get revenue around $1.4B this year at a decent gross margin of around 40%. Now Gentex shares are going for 3x sales, so may be with MBLY’s superb margins and opportunity as the leader in the space we can afford it says multiple of 10x - 20x sales. If so, the stock is anywhere between 3 to 6x over priced.
May be the best comparison for MBLY is Ambarella (AMBA). AMBA addresses a range of different markets including the camera market, more specifically the wearable sports cameras (GOPRO); automotive aftermarket cameras, security cameras; telepresence cameras; and camcorders. It also works in the infrastructure market, where they provide solutions for efficient management of IP video traffic, broadcast encoding and transcoding and IP video delivery applications. AMBA is also strongly growing revenues and enjoys high gross margins, typically in the low 60% range. AMBA and MBLY are similar in that they both are SoC solutions, they are fabless, and they are selling highly specialised software that run efficiently. My impression is that AMBA also has a pretty large market opportunity.
So, how much is AMBA selling for? With about $170M in TTM revenue and a market cap of $1.5B, AMBA’s stock is priced around 9x sales on TTM basis. If AMBA is selling for 9x sales, I can’t really see why MBLY should be selling for 60x sales and have a $10B valuation.
And now that I wrote this post, it seems prudent that I close my written puts on MBLY!!!
Anirban
6 Likes
Thanks Saul
Anirban,
Excellent analysis. Thanks for educating me. I truly appreciate your reply.
Fool and Fools On,
KLVanLiew