Shares of Mobileye Global are expected to take a significant hit as the company warns of a sharp decline in first-quarter revenue. The developer of autonomous driving technologies cites a build-up of excess inventory by top-tier customers, following supply-chain constraints in recent years.
Premarket Performance In premarket trading, Mobileye’s shares have already dropped by 22% after closing the previous session at $39.72. Despite a 28% increase over the past year, the stock’s future seems uncertain.
Excess Inventory Challenges Mobileye reveals that conversations with its tier one customers regarding potential orders for 2024 have uncovered excess inventory. Companies aim to prevent parts shortages and compensate for lower-than-expected production at certain parts manufacturers during 2023. As supply-chain concerns ease, Mobileye expects customers to exhaust the vast majority of this excess inventory within the first three months of the year.
Expected Revenue Decline Mobileye anticipates a decline of approximately 50% in first-quarter revenue compared to the $458 million generated the previous year. However, the company expects revenue to normalize throughout the remainder of 2024. Unfortunately, this decline will have a negative impact on earnings. Mobileye predicts significantly lower profits in the first quarter, with an operating loss ranging from $257 million to $242 million.
Revised Forecasts For full-year 2024, Mobileye forecasts revenue between $1.83 billion and $1.96 billion, down from the previously expected range of about $2.08 billion to $2.08 billion for 2023. Additionally, their projections for the final quarter of 2023 have been adjusted to revenues of $634 million to $638 million, compared to the previously implied range of $623 million to $648 million.
Mobileye faces significant challenges ahead as it grapples with excess inventory and a steep decline in revenue. Only time will tell how the company navigates these obstacles and its effect on the autonomous driving technology market.
