After Plunging Last Week, Mobileye (MBLY) Is Sinking Again Today

After tumbling 28% in the last five trading days headed into today, Mobileye (MBLY) is down again today in pre-market trading, slipping 2%.

Mobileye creates and markets advanced driver assistance systems (ADAS) and offerings related to autonomous driving.

A fleet of autonomous vehicles driving down a sun-drenched highway.

The Reason That MBLY Stock Plummeted

MBLY stock tumbled last week because investors were disappointed by the lack of new deals announced by the firm at this year’s Consumer Electronics Show (CES) conference.

In 2024, MBLY disclosed multiple design wins at CES.

Needham Was Bullish on the Shares in December

Last month, investment bank Needham kept a Buy rating on MBLY stock. Moreover, the bank maintained a $20 price target on the name. That’s well above the shares’ current price of around $15.35.

After attending Mobileye’s Analyst Day on Dec. 9, Needham viewed the company’s Supervision technology and its Drive product, which had not yet been produced, favorably. Supervision enables drivers to take their hands off the steering wheel, while Drive is supposed to support robotaxis.

Also importantly, the company disclosed at its Analyst Day that it was in late-stage talks with a Japanese automaker and a European automaker. The Japanese firm, which is rumored to be either Honda (HMC) or Mazda, is reportedly looking to utilize Mobileye’s SuperVision offering.

Mobileye’s Valuation Is Historically Low

In the wake of the decline of MBLY stock, the shares’ valuation is relatively low on a historical basis. They now trade at a forward price-earnings ratio of 29. That’s well below the stock’s P/E ratios as of last June 30, last March 31, and Dec. 31, 2023. During those periods, the shares had P/E ratios of 76 times, 83 times, and 51 times, respectively.

However, as of Sept. 30, 2024, MBLY had a forward P/E ratio of just 26 times.

While we acknowledge the potential of MBLY, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than MBLY but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.