Al Root

Shares of Mobileye fell early Thursday after the self-driving-technology company issued disappointing financial forecasts for 2025. It's a sign that the coming robotic-vehicle revolution isn't helping everyone equally.

For the fourth quarter, Mobileye generated sales of $490 million, down 23% year over year. Falling sales aren't great, but Wall Street was looking for about $480 million, according to FactSet.

Adjusted earnings per share came in at 13 cents. Wall Street was looking for 11 cents.

Shares were down 7.9% in early trading at $14.75, while futures on the S&P 500 were up 0.3%. Dow Jones Industrial Average futures were down 0.1%.

The problem was guidance. For 2025, Mobileye expects sales to land between $1.7 billion and $1.8 billion while Wall Street was projecting $1.9 billion. The midpoint of management's range of forecasts for operating profit is about $220 million, compared with a consensus call closer to $330 million

Baird analyst Luke Junk called the quarter "fine," but panned the guidance in a Thursday report. "Guidance clearly appears to reflect several facets of conservatism," he wrote, noting that customers were reducing their inventories. In addition, he said, there were no announcements of plans by car makers to use Mobileye systems in coming models.

"The stock appears set to open meaningfully lower, as investors probe downside risk to near-term expectations set against expected 2026 acceleration," Junk wrote

Mobileye makes hardware and software that helps cars drive themselves. It sounds like a great business to be in because self-driving technology is all the rage these days. Alphabet's self-driving robo-taxi business Waymo is expanding across the country and Tesla plans to launch a self-driving robo-taxi service this year. Initial trials should start as soon as June in Austin, Texas.

Self-driving potential, however, isn't helping all self-driving stocks. Coming into Thursday trading, Mobileye shares were down roughly 40% over the past 12 months.

Mobileye sells components to Volkswagen and other large auto makers. Its top three customers account for almost 70% of sales. Mobileye doesn't disclose who is the largest, but VW is likely in the top three.

Cuts to expectations for sales have weighed on investor sentiment. At the start of 2024, Wall Street expected annual sales of about $2.6 billion. Mobileye ended up generating about $1.7 billion, down from $2.1 billion in 2023.

Wall Street still sees growth ahead. Sales in 2027 are forecast to be $3.1 billion, but investors aren't sure those estimates will be met.

Junk rates Mobileye stock at Buy and has a $25 price target for the shares. Overall, 54% of analysts covering the stock rate shares at Buy. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. The average analyst price target for Mobileye stock is about $20.

Write to Al Root at allen.root@dowjones.com

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January 30, 2025 09:27 ET (14:27 GMT)

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