Mobileye shares fall as short-seller Citron questions prospects

Reuters News
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Posted: Sep 09, 2015 2:22 PM

(Reuters) - Driver-assistance systems maker Mobileye NV's shares fell after short-seller Citron Research said there was nothing in the company's "financials, business performance or realistic future prospects" to justify its $12 billion market value.

Shares of Israel-based Mobileye, which makes camera-based systems that help drivers avoid collisions, fell as much as 7 percent to $48.98 on Wednesday.

Citron set a short-term price target of $25 on the stock, its initial public offering price, and a lower long-term target of $10. The median price target of 13 analysts is $71, according to Thomson Reuters data.

"Investing in this company is a 'Hail-Mary bet' on a blue-sky future that just does not exist," Citron said in a statement. (http://bit.ly/1Odb3j8)

The short-seller said Mobileye did not own patents on advanced driver assistance systems that could discourage competition nor did it have long-term supply commitments.

"It is Citron's opinion that much of the run in Mobileye's stock is due to the hype surrounding (autonomously) self-driving cars," it said.

Mobileye could not be immediately reached for comment.

Short-sellers make money when the stock price of a company drops. They sell borrowed shares in the hope of buying them back at a lower price, returning them to the lender and pocketing the difference.

Mobileye has said it expects to benefit from the growing trend of semi-autonomous and autonomous cars, developed by companies such as Tesla Motors Inc and Google Inc.

Mobileye's technology detects other vehicles and objects using only a camera and software based on algorithms, unlike other systems that use complex radar-based sensors.

The stock's intrinsic value is $10.97, according to Thomson Reuters StarMine's model, which calculates the value by taking into account analysts' earnings per share growth forecasts.

(Reporting by Anya George Tharakan in Bengaluru; Editing by Kirti Pandey)