My top tech IPO to buy in January

Last year was not kind to the initial public offering market, with global IPO activity falling 45%, leading to a 61% drop in revenue. According to Ernst & Young, more than 1,300 IPOs have raised just $179.5 billion, although tech stocks are at the forefront, accounting for a quarter of the total.

In the US, there were only 214 IPOs that raised $21.8 billion in 2022, far more than the 1,091 offerings that raised $335 billion in 2021.

It was one of the biggest. My mobile (Mbl -0.84%)Autonomous vehicle technology spinoff from Intel (INTC 1.39%) It went public on October 26, issuing 51.9 million shares at $21 per share. It generated more than $1 billion in net income for the technology stock.

In trading volume over two months, the stock has gained 59%, and although there are significant risks to this business, this may be the tech IPO you want to buy this month.

Driving to new heights

The autonomous vehicle market is exploding. Already a $25 billion opportunity, it is expected to grow at a compound annual rate of 26%, with the market expected to reach $197 billion by 2030. While analysts tend to peg the industry’s growth at a high rate, it’s clear that the self-driving vehicle market will achieve the projected growth.

Mobile is a leading player in the space and has always been one of Intel’s most successful divisions since its acquisition by Intel in 2017. Ford, BMW, General Motors, VolkswagenAnd Toyota Among the customers.

The company offers a complete software platform that enables not only cameras and other driver assistance systems, but also a “full stack” of mobile-assisted and autonomous driving technologies, as Intel puts it.

Mobileye expects revenue of nearly $1.4 billion in 2021, but $1.3 billion in the first nine months of 2022, up 27 percent year-over-year.

CEO Amnon Shashua told the Consumer Electronics Show in 2023 that Mobileye expects to reach $17 billion in revenue from driver-assistance products by 2030, of which 20 percent, or $3.5 billion, will come from its surveillance product, a quarter. Quarter of 2021.

Developed by China’s Geely Group, Supervision is a departure from Mobileye’s camera-only subsystems, offering premium, all-round computer vision and operational point-to-point assisted driving navigation. It carries a higher price tag, which helped boost quarterly revenue and average system price to $53 million from $45.7 million, but lower margins due to the extra hardware it carries.

Image source: Getty Images

Recently head wind

Despite all this upward momentum behind Mobileye, Wall Street is looking for only single-digit earnings growth in 2023, as it feels this will be a transition year for tech stocks. Still, Mobileye is the only standalone pure-play stock and looks well positioned to deliver strong growth in the coming years.

Not only are they expecting great things from mobile surveillance analysts, but the EyeQ system is on a chip (SoC), an integrated circuit that integrates most computer systems. Although product revenue rose 28 percent in the third quarter, it was hampered by global chip shortages and ongoing supply chain issues. Mobileye buys all its SoC from one supplier, and three Tier 1 car companies — ZF, Valeo and Aptiv — 35%, 19% and 17% of revenue in 2021, respectively.

The stock isn’t cheap either, trading at 49 times next year’s earnings, although it’s already free cash flow positive, with $316 million spent in the third quarter. Mobileye faces tough competition. Tesla, AppleAnd SonyAll have great resources.

The pure game in space

Mobileye looks like a good long-term tech IPO to buy, even if you don’t end up getting the lowest price on the stock.

The slowdown could dampen consumer spending and slow how quickly the autonomous vehicle market takes off. However, for investors who are willing to accept a certain level of risk in their portfolios, Mobileye could ultimately bring significant returns down the road.