MobilEye Securities Litigation

Court: United States District Court for the Southern District of New York
Case Number: 1:24-cv-00310-DLC; 1:24-cv-03190-DLC
Class Period: 01/26/2023 - 01/03/2024
Case Leaders: Salvatore J. Graziano, Jesse L. Jensen

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Based in Israel, Mobileye is a technology company that develops advanced driver assistance systems (“ADAS”) and autonomous driving software and hardware products. The Company’s core product is its EyeQ SoC, a computer chip used in vehicles for driver-assistance and partial autonomous driving. Mobileye generates most of its revenue from sales of its EyeQ SoC to Tier 1 automotive suppliers which, in turn, sell the technology to vehicle manufacturers, known in industry parlance, as Original Equipment Manufacturers (“OEMs”).

Throughout the Class Period, Mobileye repeatedly assured investors that “management is monitoring inventory levels on an ongoing basis” and that the Company did not anticipate that supply chain constraints would materially adversely affect its business. The Company also repeatedly touted its efforts related to “re-building our strategic inventory of EyeQ chips” as well as the increase in Mobileye’s shipments of its EyeQ SoCs. Mobileye also provided assurances to investors that “[w]e are actively working with more than 50 [OEMs] worldwide on the implementation of our ADAS solutions.” While Mobileye acknowledged that it expected some of its Tier 1 customers to utilize accrued inventory on hand before placing new orders, the Company pointed investors to the recent trend of ADAS volumes growing faster than the overall automotive market, from which Mobileye claimed it was poised to benefit.

These and similar statements made throughout the Class Period were false and misleading. In truth, since 2021, Mobileye’s customers had stockpiled inventory of millions of units of EyeQ SoCs that far exceeded existing demand. Due to that inventory surplus, there was a significant risk that the Company’s top customers would buy less product, thereby negatively impacting the Company’s 2024 financial results. As a result, Mobileye’s statements concerning its business and prospects lacked a reasonable factual basis.

The truth emerged on January 4, 2024, when Mobileye shocked the market by issuing guidance for 2024 that massively missed analysts’ expectations. The Company disclosed, for the first time, that, since 2021, its largest customers had built-up excess inventory of between 6 and 7 million units of Mobileye’s EyeQ SoCs that those customers would first need to destock before ordering additional units from the Company. As a result, the Company revealed that “lower-than-expected volumes in the EyeQ SoC business” would negatively impact Mobileye’s profitability. The Company also revealed that, for the first quarter of 2024, its revenue would decline by approximately 50%, relative to its $458 million in revenue during the first quarter of 2023. For the full year of 2024, Mobileye expected total revenue of between $1.83 billion and $1.96 billion, which was a staggering 26% below the $2.6 billion analysts expected. This dismal guidance was primarily driven by the Company’s expected shipment of between just 31 and 33 million EyeQ units during 2024, as compared to the 37 million units Mobileye shipped to customers in 2023. This led multiple analysts to issue downgrades of Mobileye. As a result of these disclosures, the price of Mobileye stock declined by $9.75 per share, or 24.5%, from $39.72 per share to $29.97 per share, wiping out almost $900 million in shareholder value.