Semiconductor giant Intel Corporation (INTC) has reportedly slashed the valuation of its self-driving unit Mobileye to $30 billion. Mobileye develops autonomous driving technologies and advanced driver-assistance systems, including cameras, computer chips, and software.
Intel had huge plans to debut Mobileye in the stock market with an initial valuation of $50 billion. The overall negative investor sentiment is even forcing the company to postpone the initial public offering (IPO) to a more lucrative time next year, a Bloomberg report cited.
Amid the uncertain macroeconomic backdrop, Intel is deliberating delaying the listing of Mobileye to next year in the hopes of receiving a higher valuation and positive investor attention. Nevertheless, Intel may still proceed with the IPO as scheduled if the chip stocks recover quickly.
Notably, Intel plans to hold a majority of its stake in Mobileye once it goes public. The company could use the funds to make a turnaround strategy and also enter into the foundry business to compete effectively in the semiconductor space.
What is the Prediction for Intel Stock?
The semiconductor space is still undergoing a setback from the supply chain snarls and logistics challenges. Intel has been performing poorly compared to its peers, and its second-quarter results also failed to meet Wall Street expectations.
On TipRanks, INTC stock has a Hold consensus rating. This is based on four Buys, 17 Holds, and nine Sells. The average Intel stock prediction of $38.55 implies 22.2% upside potential to current levels. Meanwhile, the stock has lost 39.2% so far this year.
Moreover, hedge funds are exiting the stock owing to its poor performance. TipRanks’ Hedge Fund Trading Activity tool shows confidence in Intel Corp. is currently Negative, as 37 hedge funds decreased their cumulative holdings of the stock by 1.4 million shares in the last quarter.
Ending Thoughts
Intel is struggling to make its presence felt in the highly competitive and lucrative semiconductor space. The company’s plan to spin off Mobileye will provide the much-required liquidity to strengthen its financials and expand into the foundry business. Despite the near-term noise, analysts are holding on to the stock in anticipation of better days. Moreover, with the CHIPS Act coming into play, Intel will surely emerge victorious in the long run.
