Why Intel Stock Is Up By 4% Today
Intel Stock Rallies As Traders Cheer The Company’s Decision To Take Mobileye Public
Shares of Intel gained strong upside momentum after the company announced that it would take Mobileye public.
Intel stated that Mobileye’s revenue should increase by more than 40% in 2021 compared to 2020. The company noted that it would maintain majority ownership of Mobileye and that Intel and Mobileye would “continue co-development of solutions and technologies to further both companies’ interests in the automotive tech market”.
The success of Rivian Automotive IPO and the recent rally of Apple stock, which was triggered by speculations about the company’s potential autonomous car, showed that market’s appetite for bets on the future of mobility remained very strong.
In this environment, Mobileye’s listing may unlock value for Intel shareholders. Intel stock lagged peers in the tech space, and it looks that management felt pressured to improve performance and show that the company is focused on delivering value to shareholders.
What’s Next For Intel Stock?
Analysts expect that Intel will report earnings of $5.28 per share in 2021 and $3.7 per share in 2022, so the stock is trading at roughly 14 forward P/E. This is cheap for a tech stock, but traders are mostly focused on growth when buying stocks in this market segment, so it’s not surprising to see that Intel stock has been under pressure for many months.
In order to break the downside trend, Intel stock needed upside catalysts, and it looks that Mobileye may serve as such a catalyst. Mobileye’s value was “hidden” inside Intel story, but now traders who were not comfortable with betting on Intel as a whole could purchase Mobileye shares. In such situations, the pool of potential investors increases, which should provide additional support to Intel stock.
It should be noted that Intel stock pulled back from $55 to $53 during today’s trading session as some traders decided to take profits off the table, but the stock should have a good chance to develop additional upside momentum in the upcoming trading sessions.
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