Summary
The autonomous driving market is touted as the future of transportation, and investors are eager to identify the companies that will lead this revolution. However, Mobileye’s (MBLY) expected declining revenue growth next year raises questions about its potential as a long-term investment. While valuations are becoming more attractive, it is crucial to determine whether Mobileye is a great company or just a fair one in this rapidly evolving market.
The Autonomous Driving Thesis
According to a report by L.E.K. Consulting, the autonomous driving market can be divided into three key areas of investment: electrical and control systems, sensors, vehicle services, and infrastructure upgrades. The report predicts that Level 5 autonomy, which represents complete driverless capabilities, will emerge by 2035, while the earlier levels of driver assistance will be implemented gradually.
The levels of autonomy include:
Level 2 (today): Systems that enable the vehicle to control steering and braking under specific conditions like adaptive cruise control and lane-keeping assist systems.
Level 3 (coming soon): Allows the vehicle to control all aspects of driving under certain conditions, with human intervention required if necessary.
Level 4 (expected by 2035): Similar to level 3, but without any conditions requiring human intervention.
Level 5 (future goal): A fully autonomous driving system without the need for human intervention.
While Mobileye has been a pioneer in computer vision technology for autonomous vehicles, its slowing revenue growth raises concerns. As the market becomes more competitive, investors should carefully analyze the company’s financials and potential for growth. Investing in a company solely based on valuation may not be the best strategy, as it is essential to focus on its long-term viability and ability to adapt to changing market dynamics.
Conclusion
Mobileye’s declining revenue growth highlights the importance of thoroughly evaluating companies in the autonomous driving market. While the market has immense potential, investing in a company solely based on its valuation may prove to be risky. As technology continues to evolve, investors should consider a company’s competitiveness, financial stability, and ability to innovate. The autonomous driving market is still in its early stages, and identifying the key players that will succeed in the long run requires a comprehensive understanding of the industry dynamics.