Agree with your analysis, except the L4 figures - no chance they'll have tens of thousands by 2027, or 100K+ by the end of the decade. Even so, i still wonder if at current (11B-12B) valuation - this is not a favorable investment. let's do a quick and dirty revenue forecast for 2030:
2B - current ADAS business (assuming no growth, just cycle rebound)
1B - L4 robotaxi (20K cars produced annually by 2030, $50K ASP)
0.5B - MAAS fees (by that time they'll already have a decent # of cars driving worldwide) + Radar deals + some surround adas + stuff.
That's 3.5B, about double today. slap the current P/S multiple on that, it's double the share price.
That's very conservative - ignoring L2+ and L3, and using lower L4 figures than the ones you've mentioned.
Slap a 10X P/S multiple on that (which makes sense if indeed robotaxi leadership is achieved, and l2+ and L3 are just lagging a few years behind), it's more than 3X today's market cap.
L4 succeeds more than that, or L2+ and L3 materialize faster, and overall autonomous hype hits the fan? - you're looking at both higher revenue and higher multiple by 2030.
On the other hand - the downside here is pretty limited given the formidable ADAS business, and existing assets.
What am i getting wrong?
And a comment on INVZ - assuming 20K L4 robotaxis produced annually, is not that great for INVZ (at 9 units for 500$ per vehicle, that's just $90M). So to believe in INVZ, you have to believe either L4 robotaxi succeeds way beyond that, or L3 coming sooner). the downside on the other hand, is 100%.
So in other words - if you model the potential revenue based on production numbers and ASP, i don't see how you can view INVZ as a favorable investment, without assuming the same for MBLY.
Thanks for the thoughtful comment, this is one the reasons why I write!
L4: I agree it's a stretch that there are tens of thousands in 2027, but definitely possible by end of year 2027. VW is building a facility to produce 50k a year, Holon also aims to produce ~10k if I remember correctly, so in theory ramp up can be quick.
At current valuation it might be a good investment, the problem is what multiple do you pay for a business that isn't growing/has low growth? That's why the design wins are so needed.
If Mobileye doesn't win more SADAS awards, they'll lose share in their core ADAS business (which I don't think will be growing post 2027 in any event). SADAS is going to replace ADAS in higher end vehicles in the US and EU from 2027 onwards, if OEMs can do this on their own or with cheaper suppliers, Mobileye's dominant market share is going to shrink.
Re 0.5b in MAAS fees, seems like you're lumping in a bunch of items here (SADAS, radar)? I honestly have no idea how to value the MAAS fee bizmodel, we'll have to see how it plays out, but in theory if it's a few cents per mile that would be much MUCH lower than 0.5B (for example 20k vehicles * 0.02 cents per mile * 100 miles a day * 365 = $14.6m). Even if you increase cents per mile by 10 you still get to a much much lower number.
So I'd say that without more design wins, especially on SADAS, you're looking at a lower revenue number, and more importantly a challenged growth outlook from 2030 - 2035, which is what the stock price would be based on. A 10x P/S sounds high to me in any event where the company isn't growing at a reliable 30% CAGR for 5 years. Don't forget that Tesla isn't standing still and neither is Waymo. So there's definitely going to be competition by 2027-2028.
One thing you didn't mention is the SV and Chauffeur wins with the VW group which are significant and will be positive for revenue.
While I agree the downside is very limited, there's a core business that's FCF positive, the downside for me is mainly opportunity cost and very limited upside if the positive side doesn't play out.
That's why I'm wait and see on Mobileye. My core thesis on Mobileye has evolved over the past year to basically be 'Mobileye has missed the boat due to arrogant management and aren't going to be the leader in SADAS and L2+ like they are in core ADAS'. This thesis can easily be proven wrong by significant design wins.
Regarding Innoviz -
1. The risk reward is very different for Innoviz, whereas upside can be 10-20x which isn't the case for Mobileye.
2. I have a detailed article on Innoviz and I assume that L4 is similar to what you mentioned.
3. The main point for Innoviz is that they just need to survive to be a great return, so Drive + VW awards for Chauffeur are very meaningful for them (and not meaningful enough for Mobileye), and unlike MBLY I have more faith in their pipeline at the moment.
Agree with your analysis, except the L4 figures - no chance they'll have tens of thousands by 2027, or 100K+ by the end of the decade. Even so, i still wonder if at current (11B-12B) valuation - this is not a favorable investment. let's do a quick and dirty revenue forecast for 2030:
2B - current ADAS business (assuming no growth, just cycle rebound)
1B - L4 robotaxi (20K cars produced annually by 2030, $50K ASP)
0.5B - MAAS fees (by that time they'll already have a decent # of cars driving worldwide) + Radar deals + some surround adas + stuff.
That's 3.5B, about double today. slap the current P/S multiple on that, it's double the share price.
That's very conservative - ignoring L2+ and L3, and using lower L4 figures than the ones you've mentioned.
Slap a 10X P/S multiple on that (which makes sense if indeed robotaxi leadership is achieved, and l2+ and L3 are just lagging a few years behind), it's more than 3X today's market cap.
L4 succeeds more than that, or L2+ and L3 materialize faster, and overall autonomous hype hits the fan? - you're looking at both higher revenue and higher multiple by 2030.
On the other hand - the downside here is pretty limited given the formidable ADAS business, and existing assets.
What am i getting wrong?
And a comment on INVZ - assuming 20K L4 robotaxis produced annually, is not that great for INVZ (at 9 units for 500$ per vehicle, that's just $90M). So to believe in INVZ, you have to believe either L4 robotaxi succeeds way beyond that, or L3 coming sooner). the downside on the other hand, is 100%.
So in other words - if you model the potential revenue based on production numbers and ASP, i don't see how you can view INVZ as a favorable investment, without assuming the same for MBLY.
Thanks for the thoughtful comment, this is one the reasons why I write!
L4: I agree it's a stretch that there are tens of thousands in 2027, but definitely possible by end of year 2027. VW is building a facility to produce 50k a year, Holon also aims to produce ~10k if I remember correctly, so in theory ramp up can be quick.
At current valuation it might be a good investment, the problem is what multiple do you pay for a business that isn't growing/has low growth? That's why the design wins are so needed.
If Mobileye doesn't win more SADAS awards, they'll lose share in their core ADAS business (which I don't think will be growing post 2027 in any event). SADAS is going to replace ADAS in higher end vehicles in the US and EU from 2027 onwards, if OEMs can do this on their own or with cheaper suppliers, Mobileye's dominant market share is going to shrink.
Re 0.5b in MAAS fees, seems like you're lumping in a bunch of items here (SADAS, radar)? I honestly have no idea how to value the MAAS fee bizmodel, we'll have to see how it plays out, but in theory if it's a few cents per mile that would be much MUCH lower than 0.5B (for example 20k vehicles * 0.02 cents per mile * 100 miles a day * 365 = $14.6m). Even if you increase cents per mile by 10 you still get to a much much lower number.
So I'd say that without more design wins, especially on SADAS, you're looking at a lower revenue number, and more importantly a challenged growth outlook from 2030 - 2035, which is what the stock price would be based on. A 10x P/S sounds high to me in any event where the company isn't growing at a reliable 30% CAGR for 5 years. Don't forget that Tesla isn't standing still and neither is Waymo. So there's definitely going to be competition by 2027-2028.
One thing you didn't mention is the SV and Chauffeur wins with the VW group which are significant and will be positive for revenue.
While I agree the downside is very limited, there's a core business that's FCF positive, the downside for me is mainly opportunity cost and very limited upside if the positive side doesn't play out.
That's why I'm wait and see on Mobileye. My core thesis on Mobileye has evolved over the past year to basically be 'Mobileye has missed the boat due to arrogant management and aren't going to be the leader in SADAS and L2+ like they are in core ADAS'. This thesis can easily be proven wrong by significant design wins.
Regarding Innoviz -
1. The risk reward is very different for Innoviz, whereas upside can be 10-20x which isn't the case for Mobileye.
2. I have a detailed article on Innoviz and I assume that L4 is similar to what you mentioned.
3. The main point for Innoviz is that they just need to survive to be a great return, so Drive + VW awards for Chauffeur are very meaningful for them (and not meaningful enough for Mobileye), and unlike MBLY I have more faith in their pipeline at the moment.