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What other tech stock to consider?
- Thread starter Sanny
- Start date
Johan
Ex got M3 in the divorce, waiting for EU Model Y!
Well said. The big guys play by entirely different rules.
If SpaceX ever goes public I'm utterly confident that Goldman Sachs will be the main underwriters. They seem to have a close relation with TSLA and Elon.
So, how does one really go about forming a client relation with GS??? Can I open a trading account with them and transfer my stock holdings and options there??? All this of course to be in a position to be allocated shares from future hot IPOs.
Johan: In decades past I used Goldman as our Prime Broker. We terminated our relationship with them when our (quite famous at the time) big short position in ______X_______ made us an immense return; at the time not only were we close to the only shorters in this situation, but the rest of the US and global equity markets were tanking. Goldman was on the opposite side of this trade. They had their lawyer review the position - and came back to us and said they were reversing - nullifying - the entire situation, thus destroying our profits and making their traders whole.
And after THAT they never got a single trade from us again, nor any respect. That Tesla uses them as their investment conduit I understand, but bitterly.
any wild guesses where MBLY could be in 5-10 years?
Its hard to find any information regarding their future products.
Are they on the same path as Google?
Or will the only develop technology that is requested from the Manufacturers.
Level 1- Level 3 self driving cars
Level 4 would be the plague for the Manufacturers, that's why I Google as the leader, since the don't care to crush the Manufacturers.
Level 4 Means there is no necessity for a steering wheel, and many models wont have a steering will or gas pedals at all
My prediction is: from the day the first Level 4 car is in final production, 10-15 years from that moment on the first countries will start to ban the manual driven cars.
Its hard to find any information regarding their future products.
Are they on the same path as Google?
Or will the only develop technology that is requested from the Manufacturers.
Level 1- Level 3 self driving cars
Level 4 would be the plague for the Manufacturers, that's why I Google as the leader, since the don't care to crush the Manufacturers.
Level 4 Means there is no necessity for a steering wheel, and many models wont have a steering will or gas pedals at all
My prediction is: from the day the first Level 4 car is in final production, 10-15 years from that moment on the first countries will start to ban the manual driven cars.
This is my understanding and I am willing to hear opposing positions as I want my concepts challenged.
Google: Radar based system that is VERY expensive ( I have heard maybe $70,000 per car) at this point. Sure they will continue to improve it but it is not adopted by any OEMs at this point. Mobileye: based on their RoadShow (which is no longer available) they are already being used by many manufacturers and the cost to the car companies is $150. They have lots of 'real mileage' testing on their camera based system. Thus, why would any company (including Tesla which is rumored to be using it in their X) want to spend their resources (time and money) to develop their own systems.
My take: Would not be surprised if Google would buy them.
Zzzz...
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I remember from RoadShow/prospectus that they introduce next gen chip in the beginning of 2015, and started developing the gen after the next one, targeting 2018. With each chip providing several times computational performance increase comparing to previous gen.
But I'm personally sceptical about long term MBLY viability.
I think this car is using radar in addition to MobilEye controlled camera.
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My investment premise on MBLY is that it will do well for 1-2 years then face competition ( lower MBLY price ) or be bought up by a company like Google. I have made good and bad investment decisions before but I like MBLY over that time period......Just wish I could have gotten in at the IPO price of $25!
I do believe radar/camera combo holds the most promise moving forward and would not be surprised if we see the company that can integrate them be the long term 'winner'.
Tesla would probably need to pay at least $10b to acquire MBLY. Way too rich for me if I was Tesla.
It remains to be seen where MBLY will find a base. If the stock price stabilizes at $25 or less that would be a $5B valuation. Tesla could pay with TSLA stock which has massive upside potential for MBLY shareholders. Its not so crazy... and to me it seems like a great fit for Tesla to be the leader in the automotive tech space.
I disagree. Mobileye's business is basically collecting future licensing fees for a SoC that's manufactured by STMicroelectronics. Last year they collected $80mm in revenue. It's going to be a long time before they reach net profits that can justify this kind of valuation, and there can be tons of competitive pressures before it can get there. Unlike the broader auto industry, there's a ton of very smart people and innovative entrepreneurs in the semiconductor arena. The software side of their business has an even lower barrier to entry for competitors (for example, from what we know TM is writing their own software). Integrating them as a subsidiary and navigating that business would take a lot of attention and focus off of everything Tesla is working on already.
$5 billion could be spent in a much more effective way by TM on their core business. Like Elon said, stationary storage is close to being economically viable and there is a quasi-infinite demand there.
That said, I've only very briefly skimmed the MBLY prospectus so if anyone has insights into the competitive advantages and a compelling case for long term prospects, I'd love to hear it.
Valuation is one problem, and even if MBLY went to $5 billion market cap Tesla would still need to pay a premium to acquire it (ie., $7.5 billion or so).
Also, if Tesla acquires MBLY I think it would scare away a lot of the clients of Mobileye (ie., other car manufacturers) since a competitor (Tesla) would now fully own the technology for their future autonomous control systems. In other words, if Tesla acquired Mobileye then car companies would likely migrate away from Mobileye to the solutions offered by Mobileye's competitors, and that would destroy a lot of the value that Mobileye's market cap holds in addressing the entire auto market.
IMO, Tesla's doing the right thing by utilizing some of Mobileye's tech (ie., hardware, etc) but developing their own internal autopilot software solution by hiring top engineers. With $1 billion in investment, Tesla can hire 500 autopilot/software engineers and pay them $400k each (inc. stock compensation, etc) for 5 years. I think that would be a much better use of money than paying $7.5-10b for MBLY.
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Mobileye is not just selling a SoC manufactured by another company. Mobileye has deep software expertise and is on the cutting edge of autopilot technology (they were leaders in adaptive cruise control and other safety features) in terms of both hardware and software. With autopilot, the real difficult part is the software and it will take many years (10-20?) to perfect it to a place where auto-pilot can be used safely in all situations - the software problem is really complex and challenging.
As autopilot features get integrated into more and more cars, Mobileye (if they can keep their market leadership) will have an increasingly larger addressable market with higher margins.
I hear what you are saying but how is Tesla owning Mobileye and selling it to other car companies any different than Tesla selling their drive trains to other car manufacturers? If anything it might help the case since Tesla is perceived as the Auto-Tech Top Dog (Tesla Inside as a bragging point).
Also, how do we know that Tesla's own auto-pilot is not based upon Mobileye camera, chip and proprietary software?
Just a thought, it feels plausible...
I don't doubt Tesla has experimented with Mbly tech, but I doubt they'd actually use them. Tesla seems to like to do most of its stuff in house. If I remember correctly, I think Elon had mentioned how they've hired some of the best software engineers to work on autonomous driving. I'll try to see if I can find where he said this. If he did, then what would they need MBLY for?
Johan
Ex got M3 in the divorce, waiting for EU Model Y!
I'm glad I sat out the the MBLY IPO. The more I've read about it the less I understand their valuation. Camera? Chip? C'mon - you can get that from Ebay. Their whole value has to be centered around software and it would seem to me, as suggested by several great posts above, that a company like Tesla for example could develop that kind of software quite rapidly.
I've never been a believer in the long-term business model of Tesla selling powertrains to other manufacturers. It doesn't make any sense to me. Auto manufacturing is a low-margin cut-throat business and auto makers are always looking for ways to cut costs, especially on big ticket items like powertrain. There's no way that auto makers will sit back in the long-term (and in large volume) and pay Tesla to make them powertrains since Tesla will need to make a decent margin (ie., 30%+) on the powertrains and that margin is just too tempting for the other auto makers, especially on a part of the car that costs roughly 1/3 of the car. When electric cars take off (sell in the millions), other auto makers will want to make their own powertrains... similar to what Nissan and BMW are doing right now.
Also, I've listened to quite a few of the major auto maker's CEOs and they are very paranoid of giving up control to entities that the view as competitors. This is one of the main reasons IMO that Google had such a difficult time trying to convince the large auto makers to partner with them with their autonomous driving efforts. Google ended up giving up on this route and choosing to go their own way.
I actually am fairly confident that Tesla will use Mobileye's camera and chip (and maybe parts of their software). But in the bigger picture, hardware is only 10-20% of the autopilot solution. 80-90% of autopilot is going to be software and handling super difficult situations well. This is what Tesla will focus on. They'll leverage the hardware from Mobileye since it's the best out there, but they will provide the main software solution with their own engineering team.
Thanks for that. Though my thoughts on the software side were precisely because there are still auto companies choosing their hardware only and designing software inhouse (TM as an example). It tells me that even with a full understanding of MBLY's product offering's they feel they could do better insourcing the software side, implying MBLY's software is still susceptible to competition. Particularly if Elon feels like his (potentially superior) autopilot tech should be shared too to make roads safer. I could see a case where Mobileye's hardware becomes ubiquitous and they become something like the qualcomm of autopilot hardware.
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I'm actually curious now as to the MBLY API to their hardware. It could be that Tesla is using some of the low level hardware and possibly even basing their autopilot off of reference high level software provided by Mobileye for integration. All we know for sure is that Tesla is adding quite a bit of their own sauce on top of whatever it is they use from Mobileye (from the aggressive autonomy hiring)
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If you're interested in learning about Mobileye and have a few minutes, read pages 75-95 in this prospectus:
http://mobileye.dc2.q4cdn.com/51910a4d-581a-4957-801e-15e2434ab028.pdf?noexit=true
Also, note that Tesla Motors is listed as one of their customers.
http://mobileye.dc2.q4cdn.com/51910a4d-581a-4957-801e-15e2434ab028.pdf?noexit=true
Also, note that Tesla Motors is listed as one of their customers.
It is unfortunate that they take down the 'Road show' presentations a day after IPOs. It would give you a better idea of what Mobileye is all about. Investing in these companies is a 'crap shoot'. Heck, many people thought Tesla had entered the proverbial 'shadow of death' start up phase when they burned through all of Elon's cash. I would have preferred to get 'in' Mobileye at $25 and I may regret my small position in the company but their product is solid and cost effective. It appears that most of the car manufacturers that use it would prefer to pay $150/vehicle (and charge the customer a heck of a lot more) than to spend lots on the R&D to make their own solutions.
Of course, if the price drops to single digits I may have to eat those words.:wink:
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