Daily Stock Analysis Mobileeye $MBLY the pioneer in the autonomous driving space with ADAS #stocks

good morning guys hope everybody's well happy Friday to everybody today is February 16th hope you guys are well uh Market's taking a little bit of a breather today as you can see uh on the morning I saw most of the stock most of the indices at least excuse me were a little bit lower and of course the meme stock of the day some people don't want me to call it a meme stock it's just a high performing stock which is smci super micro is down about 12% or so OB I mean took a breather it went up all the way to, now down to about 800s in the 880 range about 10 15% lower uh but you know we got to see where it goes I still think there's a little bit of room for it to go down but we will see where it ends up okay one of the stocks that came up on my radar is mobile eye now a lot of people don't know about this company some of you may already know but that's fine what I wanted to be able to do was to talk and look at a little bit of the Advanced Driver assistance system systems a d as is what they're called Advanced Driver assistance systems uh that's what mobile ey does they make products that help you be able to get autonomous driving to become a reality uh and there are a host of companies that are using their platform their Solutions their products to be able to build those Advanced Driver assistance systems and these are car companies all the way from Cheri which is in China to Audi and Lamborghini in Europe to even other companies in the US including Ford and GM so what I wanted to do was just take a deep dive but not necessarily talk about mobile mobile ey alone I wanted to take a little bit of a view into what is driver assistance systems what does the future of autonomous driving look like what are the different levels what is important to understand and then look at a little bit about the different companies different approaches to this autonomous driving then get into Mobile ey what they do how they're different so let's dive into it let me know what you guys think mobile ey has been around for about a little over 20 years the company was acquired by Intel Intel still owns a big percentage of the company even though they're public so keep that in mind the float very much similar to arm which is the semiconductor uh company The Fabulous IP management company uh arm also is controlled nearly 80% of the stock is controlled by softmac mobile ey a lot of control is still with Intel int took the company public in 2021 uh 2022 and then since then the company has middle has middled in terms of performance I really think it is an interesting company to see so the companies based out of Israel in Jerusalem they've been around for about 20 years as I said and they've moved from different kinds of systems over across to the current systems that exist okay so what is Advanced Driver assistance Technologies now when you drive a car you need a lot of systems to be able mostly semiconductor and chipbase systems to help you make some of the things easier for you to drive this reduces accidents it increases driver capability and also makes it easier to be able to have uh the car itself being in a better shape now there are five major systems that make up Advanced Driver assistance systems the first one which Tesla really really likes is cameras so if you go and look at the you know any new model car late model car as they call it 2020 and even later even some in a little bit of earlier I've got a 2022 uh car BMW and 8la if you look at the later model cars they have cameras in the front in the back and some of them even have it on the side especially near the rearview mirrors or the side mirrors excuse me to be able to see if cars are coming on the side and be able to give you a 360 degree view especially when you back up you can see that in a lot of cars they show you in the front on the screen dashboard they will show you what is there at the back it's easy to be able to so you don't have to turn your turn your back do that kind of stuff cameras exist both in the front and back and increasingly because of uber lift a lot of cameras are also coming in the uh in the dash cam which is looking at it from the camera looking out so it becomes easy to be able to record things when accidents happen so you can assign blame uh for insurance companies so camera is the is the first one that helps make drivers jobs when they're driving easier the second one is the global positioning system Global navigation satellite system is gnss global positioning system for most of us so this is the ability to be able to find out where the car is as it goes around are you in a hilly area are you in a specific location that is more flat do you need assistance in that particular way gnss GPS is the second set of subsystems that are needed to be able to make sure that you can find out exactly where people are in this journey the third one is lar we'll go through every one of these in a little bit right there are a lot of lar companies that went public sometime in 2020 2021 uh Inox and Laser lazr is another company a lot of them also Consolidated you knows was the third one uh and so liar is detection and ranging light light detection and ranging gives you the ability to be able to point light to specific locations as opposed to sound which is radar and gives you the ability to be able to detect lar is useful in certain cases now of course many of you who are Tesla bulls and followers of Alon musk will say lar is useless and and Alon musk has already said they are not useful he's not right 100% for the use cases that he is suggesting he thinks that he can do enough with cameras you need Liars if you want to be able to build a robust system just like airplanes think of air Advanced uh driver assistance systems just like when you're on airplane you need backup systems every time the plane lands there are wheels but they'll always have a backup if the co-pilot fails they'll always have a backup there's too much uh pressure coming into the cabin they'll always have a backup you need to be able to reinforce systems that exist with other backup systems if in case one of them fails lar is a very good backup system radar exists as well it's very good for targets okay you're trying to go to a specific location lar and radar give you different capabilities and then vehicle to uh V b2x which is vehicle to uh integ vehicle integration vehicle to every other system also is another set of systems that exist to be able to tell you when you're on the road how far away is the car in front of you how far is it behind if there's a pole that you want to be able to park how far does that look like now every car company is looking at enhancing their cars and even in the lower end models now uh Kia Hyundai they're all coming out with Advanced Driver assistance system some of them may be very simple like helping you park some of them may be more advanced that're helping you move across Lanes automatically signaling a turn when a lane comes telling you it's okay to turn and change a Lane and go back into Lane and some of them may be even more advanced like the full service full sorry full speed self-drive like Tesla offers but a combination of these systems is what every car company uses so just to give you a feel for where these things exist if you look at the Google um car the sub driving car which is now called weo as a company you will see a lar on the top that keeps rotating around looking around trying to be able to do autonomous driving so Lars typically will be on the top cameras exist all over the place so this one is showing you camera only in this particular place over on the top but cameras exist even in the front even at the back and some cases even as I mentioned on your side mirrors over here now the gnss antenna which is the global navigation and satellite positioning system that also will exist on the top along with the camera unit bolted now some of these systems might look a little clunky but they're getting better and better as the phone fact starts to reduce and miniaturization of these chips happen uh now second part of it when you look at the Central Computer what is happening very quickly in automobiles that I've seen from a lot of friends who are at lucid and some friends who are at Tesla as well is that centralized proc processing allows you to be able to take the input from all of these and then be able to make decisions but increasingly each of these systems itself is starting to have a CPU so they make local Positioning Systems and feed certain itions of the information the central to be able to give overall direction it's like saying light R is telling me this the light R needs to be able to process and then based on what the light R said is it consistent with what the camera is saying is it different from what the gnps GN gnss or GPS is saying that's the other part okay the vehicle odometry itself is just very simple which exists even with non ASDS systems which is the ability to be able to or Adas systems which is the ability to be how far is the car moving what is the speed of the vehicle Etc Ultrasonics exist elves these are small positioning units and then finally radar systems radar systems also in the front and the back is what they exist okay if you look at what mobile ey does they have four or five different products that they offer across the Spectrum autonomous if you want to start with very simple level one aut autonomous all the way to level five we'll go through that they give you computer vision capability they give you modeling and decision making capability they give you crowdsource mapping capability radar and iming and then they've built it on top of their own system on chip purpose-built system on chip computer capabilities and CPUs that they use in their own systems now these are being used by at least over 200 different car manufacturers these are things that mobile ey provides they have 135 million shipments that they've made since they have been around now just to give you context in the last quarter about two weeks ago mobile ey announced earnings and the talk a big hit the reason is because in the last year and if you remember two years ago because of the semiconductor and the car specific chip shortage a lot of companies ordered extra and have bought and kept a lot of inventory before they get into trouble for being able to not ship the cars in place given how many cars are in demand so a lot of companies bought extra inventory into these car systems Rose in 2023 and so they said because of that inventory in 2024 they're going to see a little bit of a period of consolidation where that inventory is eaten up that doesn't mean that mobile ey is now suddenly going to go down it just means that the inventory needs to be eaten up inventry needs to be used the cars need to be shipped before mobile ey can begin you know shipping most of these systems again they've done a great job just look at this 2 million units shipped in 2014 and 15 times nearly 15 to 20 10 to 15 times the number of units shipped in just under about 10 years so mobilize REM marking now they have different products as I've said they allow you to be able to range sensing we'll go through every one of these but each of these different products is used for different capabilities different needs we'll talk about all of them in particular now when you look at level of automation I talked a little bit about it but let's go through that there's no automation which means the divers in fun control is what we will call level zero and that is really not Automation in any sense now when you go to the next level there are two kinds of things that you need you need one sensory capability and you need visual capability sensors kept in a lot of systems and cameras also kept in a lot of different systems now the level one driver assistance is where we are right now for most companies most cars lowend and high end will have a level one accelerometers tells you how fast things are going ultrasonic sensors rear view front view cameras uh and also surround view cameras so these are things that exist right now and of course partial automation where the driver will monitor all these systems where they still have their they're still in control they're still monitoring the system they're still driving it then um this is when the driver is monitoring driving and you have to keep your hands on the wheel at these systems conditional automation level three automation is when if there is an issue that comes up the driver needs to be able to get control back into these systems and that's where sensory Fusion comes into place reconstruction of where the lane is relative to other lanes precise positioning more important becomes important right and level three to five is where the automation so FSD full stelf drive even though there is a claim from a lot of people that it's a level five it's not level five it's even close to maybe level three so we're a little bit ahead and in fact I would argue of course a lot of people that disagree with me they're still just level two I have a Tesla I've had it for a long time so telling me that okay this is a level three it's just wrong that doesn't make any sense I wouldn't trust it don't use it I've tried it in even longer term uh driving modes all the way from cattle Portland it's not a level three it's still a level two just keep that in mind when you go along okay now each each of these sensors and systems works for different requirements if you want to be able to detect objects such as a lamp post such as a stop sign such as for example another car uh that is object detection just detect that is there the next step is classification of the object uh cameras work okay for that but lar and radar much much better for object detection Ultrasonics works very very good as well so if you look at the combination of these three Works in almost every case so say that only one thing is required not a lot of things are required um is kind of disingenuous now if you look at these and you start to L so these are the capabilities as you see from detecting an object to classifying the object estimating the distance and so on and so forth I'm not going to go through every one of them right you will need a lot of these capabilities when you are if not all of those capabilities and a combination of these is what gives you the best kind of capability so you have cameras you have sensors both ultrasonic sensors radar Sensers and lar centors and a combination gives you the capability to have everything that you need to get to full self drive or level five automation so make sure that you keep that in mind okay now another thing I talked about is each of these systems themselves requires some level of processing a sensor comes in a sensor is essentially sensing things it gives you signals that you have to then process to figure out okay am I detecting something am I classifying it as something else now each of these systems as I mentioned before ultrasonic sensors radar sensors cameras vehicle 2 everything um accelerator speed they all give you certain amount of system signals those are processed intelligently on the edge because if you have to send all of these across to the CPU which is the vehicle CPU itself then it becomes very hard to be able to prioritize the right one so each of them themselves will have a processor it will detect certain elements it will classify certain elements then it will send it it across to a central processing unit uh and then it actually makes a decision to be able to determine what we need to be able to do based on that the CPU on the system not controls not only the sensors it also controls the infotainment system and also other vehicle Dynamics and control system so they keep that as one of the most important things so why is this important you need system on chip for each of these individual sensor elements besides the central processing chip as well okay we're going to go through every one of these just at a high level to give you a little bit of a View mobile eye is doing something that I think is very very unique and different in the space now a lot of people understand it some people don't understand it but this is one of those companies that don't worry about the stock in the short term if you believe that autonomous driving is something that we are all going to be do in five we're all going to be doing in 5 to 10 years there is competition no doubt about that there's a lot of competition for mobile eye but they're one of the unique companies in the space in the move and the March towards autonomous driving okay so they have a lot of so Machine Vision is the first portion how do you take cameras and how are you able to go ahead and generate detection of the objects classifying of the objects themselves so going from a version Generation 3 level product to Generation 4 level product gives you a lot more automation capabilities that's the first step mobile Vision second one is lar the second part is light detection and ranging which is using sensors to send laser beams very high frequency laser beams and they by the way there are a lot of lar companies um luminar was one of the companies lazr in know is there's quite a few companies and a lot of them are public as well keep that in mind and some of these companies smaller companies are going to get acquired Mobil is a little bit bigger they're in the in the 10 to20 billion range in the midsize range they're not in the small company range a lot of the companies in the liar space are a billion or two billion or even less than that in terms of market cap so what light radar does very very well is send out as I said laser beams very high frequency beams very consistently very frequently captur the resolution to build a complete map so if you put a lot of light in high frequency you can get a detection of what that space looks like what that object looks like what are the Contours of that object and distances of the object is works very very well for what they would call near field detection not for long range detection long range is still more than 200 M but if you're in the lane and you're looking at50 to 75 to 100 m maybe 200 M you want to be able to get a quick sense of what that object is once you detect that object you might get send a multiple bunch of lights and that each of those lights gives you depth sensory gives you visual sensory that then builds for you the image of that object okay so it could be a stop sign could be anything else so that's lar light detection and ranging next one is Radar Radar is Radio detection and ranging usually typically used for being able to use noise right it it works in certain situations it doesn't do very very well when there's other noise which is almost always the case in in in looking at when you're driving right you will it'll detect a radio signal towards the object receive the signal it is very good for distance mapping as opposed to for detection of the object itself so range gives you the ability uh and you know as opposed to light detection this one works a lot more effectively when you are trying to detect speed of a specific object as opposed to the object classification itself and then gnss or Global navigation satellites say systems or GPS systems good for being able to tell you where you are send signals back into the satellite understand where you are understand the terrain of that along with the map right so you've got a map of the place you got terrain of the place the GSS tells you mapping where you are exactly and that gives you the ability to be able to say what kind of a range did you need to have in terms of the shift and the Tilt and the movement of that vehicle to everything b2x this is another so we talked about the five different I'm going to bring it back and summarize for you but vehicle to vehicle which is how do you communicate with other vehicles to prevent uh collisions vehicle to infrastructure for example can I detect that there is a traffic signal and I can go faster if it is green and slower if it is red uh don't worry about vehicle the motorcycle is the same as vehicle to vehicle vehicle to object usually typically means an object that is stationary or an object that is in slow moving and then vehicle to pedestrian so you want to be able to make sure you have sensors that can help you understand what systems exist and avoid collisions so let me summarize this for you again in terms of going back and telling you what are the different systems that are needed to be able to do full surf drive you need all of these systems you need vehicle to everything you need camera detection you need global positioning you need lar and you need Radar Now can are some of these systems a repetition are they using couple of different systems together yes they are but that's the whole point of being able to do these because you are trying to get a full map with two three points of view as opposed to with one point of view so you need multi monly sunor Fusion for Advanced Driver assisted systems to level five autonomous driving so you lose these three four SEC systems you predict the state of where it's going to be and then you filter out noise which is uh a fancy term for useless information versus signal which is a fancy term for good information so noise to Signal ratio needs to be fairly low or the signal to noise ratio needs to be fairly High make sense okay now what mobile ey does is they want to be able to get to the point of no driver actually worrying about driving uh which is what weo does already to a certain extent they use some of the products from mobile ey as well Google uses some of the weo let me call it w not Google Now Adas systems a lot of companies already do that right now the driver has their hands and their eyes on the car the hands are off the eyes are off this is the next version the supervision system um then you go to the eyes are off also system shofer and then drive so those are the four products uh Adas systems all the way to drive which is mobile ey drive so they have chauffer as well these are different products families that mobile ey offers uh and that gives you the capability to understand they're looking and thinking into the future not just here and now so they have about 275 million volume systems of the Adas systems right now even Simple cars hindai as I mentioned Kia they all give you this capability but 3 million to 4 million cars for supervision um in terms of lifetime value but I think they start to increase it so far they're only 3.5 million they they will expect to have it even higher and then um they will increase it even further with Sher systems and then even more with Drive systems this will start to go higher and higher just keep that in mind this 249 million ad systems is going to get to this point uh very very quickly Drive systems over the next 10 years you will see autonomous cars hopefully level five but even getting better at level three and level four from where the level two right now is so what does that mean in terms of the capabilities of the systems themselves U at the level at the eyes on eyes on and handson which is uh the autonomous driving level one if you will you still have crun and C camera you'll have supervision which is light little bit of back camera as well side cameras is going in the chauffeur systems not only have that but they also have lar and they have Imaging capabilities and then you move apart from there you have surround cams and you also have have complete camera so from cameras just basic cameras front camera you enhance it with the rear camera with some radar you enhance that with a lar you enhance that with software and imaging capabilities and of course you will add GPS even in the front face going all the way to managed all along so the estimated pipeline just in terms of the cars that the manufacturers of cars have told them is about $7.4 billion Worth right in 2023 alone they've won that uh they should have about 60 million unit ship with the systems that exist now this is the pipeline this is not their actual system so in terms of models about 300 different models from Nissan and Honda all the way to Volkswagen is the number one producer of all cars in the world um so they will have a lot of cars that they new models that they're going to launch as well Volkswagen then GM Toyota BMW so all of these guys are customers of mobile ey and they're launching new cars at different levels and now even the um Chinese oems Cherry seic B will also get there in a in a in a little bit of time I think uh just as an example here are some of the cars uh that they are looking to be able to launch over the next few whether it's an EV car or it's a internal combustion engine car or a hybrid car if you will all of these are using so even when you believe that the future is not EV alone doesn't matter mobile ey will do well regardless of whether it's a EV world only or if it is is a u internal combustion world or a hybrid world of some sorts if you will lots of new models to be launched so I think that's the big part of it now supervision itself um uh Cherry is actually working with mobile ey to be able to launch new and cover 100 different cities so this is one of the few companies that actually has gained quite a bit of attaction in China are there competitors yes there are competitors so some of the capabilities they have system on chip they give you computer vision they do mapping of the of the location uh driving policy based system systems they give you the complete on field system unit ship unit itself and they give you a bunch of active sensors so cameras they can actually go from just cameras alone to sensors as well they give you appearance based systems so geometry based and then they give you the capability to be able to do deep learning and sensing of these that algorithms get better so it's not just Hardware it's also algorithms that go in to be able to help you detect even better the products themselves gives you the capability to be able to have completely all of these done in a single single unit so makes it a lot more better and of course they're using people such as Taiwan semiconductor to be able to manufacture these but the number of units this will pale in comparison to mobile and AI just keep that in mind okay now driving policy itself comprises of three different things when do you need to do something when you get to a stop sign for example what do you need to do when you get there and then how do you do do it which is the breaking profile do you need to pump the break or do you need to be able to press on the break so those are essentially how they take those policies that need to happen and then create algorithms that move into that remember I talked about five different systems that exist each of these need to be able to think of an axes of redundancy redundancy is exactly what what airplanes also do for every unit of Boeing and an Airbus designs there has to be a redundancy something is a backup in case the first one fails of course if the backup also fails you're screwed but you need to be able to do this when people tell me okay you just need a camera and that's it I think they're wrong I don't think they're wrong I know that they're wrong you need to be able to have redundancy in Real World Systems when you get to level five level six or level four level five autonomous driving uh and looking at approaches that are okay you can do camera versus liar radar that's on the system side do you do end to end approaches with the decomposes you be able to do appearances based on Geometry or sorry you look at systems based on Geometry which is you put the progression map across mathematical manes or do you do based on appearance itself and then you do learning based models now when you look at cameras and you're looking at decomposable objects you're trying to essentially each of these detection systems and algorithms essentially you make a small unit and then you make that unit into into a larger unit you decompose the system into what you can object now lar also does decomposable geometry and then image rating itself uh radar as well now driving policy is very difficult because uh there is no central place that you can go to that says this is all the rules that complies how you'll be able to do it and the reason is because it comprises of 17 18 different units of measure that you need to be able to take and then making sure that you can detect and also then handle what uncertainties happen U that's mobile ey I still haven't talked about a lot about the company's units and uh just the products themselves were what I covered now let's go into our five-step process to figure out what is it the company has done from a uh unit perspective what they've done from a fundamentalist perspective and then what they've done from a stock perspective so this is mobile eye let's go through our five-step process first step in the process is looking at the annualized income statement and fundamentals and then we will go to the remaining set of analysis okay company did about 800 million 2018 and nearly two times that more than two times that in 2023 so growing at about 10% so this is a 20-y old company don't expect it to grow at 100% uh but still growing at 30 40% then going back to their Norm of about 11% so this is a little bit of a challenge don't like this very much profitable they losing a little bit of money it's not a good sign but they're losing very little money they should get to the point of profitability fairly soon let's look at it from a quarterly basis okay so they don't have the growth again they went public fairly recently uh to 12% growth not very high growth not a great sign now they finally gotten the point look at these two quarters in a row they're actually getting to a profitability uh Point that's a good sign it's a good sign but still they weren't profitable before balance sheet they have about $1 billion in actual cash the rest of it in non-current assets of which intangible assets to 13 billion Goodwill yeah the 1 billion little over a billion what am I going to say almost $2 billion doar in cash no debt this is a beautiful clean balance sheet I love this balance sheet no debt at all I love it absolutely love it so what 2 billion in cash they've just stopped losing money which is a good sign as well and cash flow decent decent cash flow to a extent to be able to support the business uh in terms of uh the valuation they don't have PE yet because they've just started so you don't have annual uh they should have had something over here at least given that but still 10 times sales for a company growing at 133% uh 10% to 13% what do they grow in the most recent quarter 11% I think yeah 12% not a great uh sign but still 10 times that's a lot uh 10 times PS is a lot but again once they start to be able to take the 50% margin growth and 10% is net margin so once they get that 10% so what are they doing in terms of Revenue they're doing roughly let's go back here they're doing about $2 billion in Revenue so $2 billion in Revenue if you take 10% of that it's about $200 million right for the trading 12 months so $200 million roughly and their valuation right now is 20 billion so their valuation is Rich even from a PE perspective is Rich yes they have about 10 times wow the 200 million 20 billion th000 PE and 10 times PS for 50% gross margins 10% margins this is Rich again but even with the stock price being low it's a little bit of rich but you want to be able to make sure that you understand what the growth profile looks like the question with mobile ey just a summary standpoint from a fundamental standpoint I would give this a seven six or seven growth is slow that's a big issue it's just turned profitable and valuation is a little bit Rich margins are not bad but yeah now I can understand why a lot of people are complaining about the stock the valuation is still Rich even though the stock is down so they went public in 2022 October 2022 uh moved up all the way very nice move up and then consolidation phase I would call this more than anything else and this is just a stage four decline so stage one stage two markup stage three uh consolidation stage four markdown this is the markdown phase and we're still in the markdown phase seems like the markdown phase this candle indicates to me on the long term we're in a markdown phase or we're just consolidating phase stage number one I'd like to think it's stage number two but now now you look at this this is still in a markdown phase um still going down so there's no real reason in the longer term this is still going down uh in the in the weekly chart it's still going down so that's what this looks like has it formed a base it's tried to actually bounce off of the base here 25 a couple of times so it doesn't seem like it wants to go below 25 which is where it is right now now can it will it go lower you've got to be able to check that on the daily none of the none of the moving averages are pointing in the right direction for me to say go buy this right now but for the longer term this looks like it's actually bouncing you want to check that's what I want to be able to check so after earnings took a little bit of a beating uh and even it announced that this is going to get so this is actually in a stage for decline uh this doesn't give me any indic this is not bad macd is not bad so momentum is slightly building but this doesn't give me any confidence that I want to be able to buy it right now wait for the move a little bit at least up to the 20 7 Zone if you want to be able to get long on this stock still on a summary basis you need a lot of different systems mobila has got a lot of wins they've got a lot of inventory already in existing system they're not growing too fast at 10% 12% year on year so the stock actually had done quite a bit of consolidation in this phase took a bit of a beating on the daily chart actually this was in January strong beating after after the and then the earnings actually when they announced they pre-announced earnings and then they went down a little bit and now they're bouncing off of the 25 range I'm going to wait to see if it actually bounces off the 25 range because the all-time low is probably a little bit lower the alltime low when they after they want public the alltime low somewhere in the 24 25 so they're probably going to bounce off of this range is my guess um going to wait for it see if it moves up a little bit Above This cluster Zone which seems to be quite a bit and this is where you want to see you want 29 is a safety zone but it might move at least from here my sense is this is a long-term technology if you buy it right now you're buying you want to wait for the confirmation but you can buy it over here and this is going to go up in about 3 years you won't be surpr I won't be surprised to see the stock closer to the 4050 range thank you very much for watching please comment let me know what you think about it have a great weekend everybody

2024-02-19 20:04

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