Nov 14, 2022
Intel raised nearly $900 million by publicly listing Mobileye, its autonomous driving subsidiary, which traded up to a value of $23 billion. That the newly relisted, vision-based driving assistance technology company could command a 14x sales multiple is perhaps a positive sign for markets given the relative paucity of IPO activity this year to date.
Though the market reception was positive, it’s dangerous to judge a company by its first few weeks given the salesmanship that surrounds a listing. We believe it is probable investors like that the business is generating substantial cashflow and so not subject to financing risk. From our perspective, however, it’s unclear that Mobileye’s technology will be able bridge the gap between driver assistance and true autonomy.
Argo.AI, a robotaxi startup funded by $2.6 billion from Ford and Volkswagen, announced its dissolution. The company, which employed 2,000, had launched commercial pilots in Miami and Austin earlier this year though uptake and capacity were unclear.
Like many robotaxi initiatives, Argo relied on a high-definition-mapping, LIDAR-based approach to solving autonomy. Solutions that rely upon high-definition mapping seem to excel in demonstrations but become brittle when confronted with a mutable urban driving terrain. We believe a dead end was perhaps the inevitable result of pairing a strategically challenged technical approach with a pair of legacy auto shareholders.
Meta reported a 46% year over year drop in operating income as a deteriorating revenue line was coupled with accelerating metaverse-related spending. Investors were not pleased, knocking more than 25% off its market cap over the course of a week. Since Mark Zuckerberg’s founder shares retain majority voting control, shareholders have no governance mechanism by which to meaningfully impact corporate strategy; given the indecorous financial results some are questioning the wisdom of the dual class structure.
Though we disagree with Zuckerberg’s use of funds—specifically regarding his metaverse strategy—we believe corporate structures that allow technology CEOs to aggressively pursue asymmetric opportunities are good for investors and good for the world. In a rapidly changing technological world, companies need to be able to make bold bets, and public equity price signals provide sufficient near-term performance pressure in and of themselves.
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 In North America, funds raised are down 94% through the first 9 months of 2022: https://www.ey.com/en_gl/ipo/trends
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