Markets

Mobileye (MBLY) Stock in Focus on Short Selling Concerns

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Mobileye N.V.MBLY has been struggling lately because of selling pressure. The company's share price tanked more than 7% yesterday. The downside can be attributed to a negative report on this Israeli company by short selling firm Citron Research.

Reportedly, Citron tweeted yesterday that Mobileye was the short of the year. To make matters worse, it offered a link mentioning that leading car manufacturer Tesla Motors, Inc. TSLA had decided to discontinue the Mobileye autopilot feature and replace it with its in-house technology. Tesla hasn't confirmed or set aside the rumor.

Citron, in its September report, had criticized Mobileye for its financials and business performance and the lack of innovation, fearing that these factors would lead to severe risks and therefore stiff competition, going ahead.

Further as per a Bloomberg report, Tesla Motors plans to shake hands with George Hotz to develop a new autopilot system that could substitute Mobileye's technology. In the same report Hotz stated that Mobileye's system was "absurd". He also said that "They're a company that's behind the times, and they have not caught up."

Hotz was the first person to unlock the original iPhone in 2007. Later, he hacked the PlayStation 3.

Meanwhile, a presenter of Mobileye denied all the allegations stating that "Our code is based on the latest and modern AI techniques using end-to-end deep network algorithms for sensing and control".

Mobileye provides essential components for the emerging advanced driver assistance systems (ADAS) market. Its EyeQ chip and software algorithms are used to take pictures of the route to be taken to determine lanes, vehicles, pedestrians, obstacles, traffic signals, congestion and other relevant information and thus assist the driver.

The company's technology is already used by some of the leading car manufacturers including BMW and General Motors Company GM . The company sells its products directly to OEMs and also in the after-market to fleet management, insurance and leasing companies.

It is worth noting that Mobileye's revenues surged 104% year over year to $70.6 million in the last reported quarter (third-quarter of 2015), helping the company report a profit of approximately $34.9 million during the quarter compared with $9.7 million a year ago.

In view of these significant positive factors and the company's efforts to counter risks, we believe that if and when the news is confirmed, Mobileye should be able to deal with it.

Currently, Mobileye has a Zacks Rank #3 (Hold).

A better-ranked stock in the broader technology sector is CEVA Inc. CEVA sporting a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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