Mobileye (NASDAQ:MBLY) experienced a sharp rally last week, rising 22.5% from its June 26 close to end Thursday at $9.57. However, the stock gave back some of those gains on Thursday, falling 1.03% as the market weighed the implications of a recently announced $250 million share buyback program. The Nasdaq was closed Friday for the Independence Day holiday, leaving investors to digest the move over the long weekend.
Buyback Details and Market Impact
The buyback authorization, approved by Mobileye's board, allows the company to repurchase up to $250 million in Class A shares. At Thursday's closing price of $9.57, that would equate to approximately 26.1 million shares, representing 10.7% of the Class A shares outstanding as of the first quarter. The buyback is intended to help offset dilution from stock-based compensation and new shares issued in connection with the Mentee Robotics acquisition.
However, the buyback comes against a backdrop of significant cash outflows. Mobileye paid $591 million in net cash for Mentee in the first quarter, which is more than double the authorized buyback amount. This has led some analysts to question whether the buyback is sufficient to offset dilution and support the stock price.
Rally Details and Market Context
The rally was concentrated on June 30, when Mobileye jumped 16.63% on heavy volume of 12.84 million shares. The stock then slipped slightly on July 1 and July 2 before Thursday's decline. The four-session volume totaled 36.48 million shares, or about 15% of the Class A float. The buyback cap, if executed at the current price, would cover about 4.3 days of Thursday's volume.
On Thursday, Mobileye's decline was less severe than that of some large-cap tech stocks, with Intel (NASDAQ:INTC) falling 5.25% and Tesla (NASDAQ:TSLA) dropping 7.49%. The Nasdaq Composite (INDEXNASDAQ:.IXIC) fell 0.8% on the day.
Fundamentals and Outlook
Despite the GAAP loss of $4.68 per share in the first quarter, driven by a $3.788 billion non-cash goodwill charge related to Intel's 2017 acquisition, Mobileye's core business showed strength. Revenue grew 27% year-over-year to $558 million, and adjusted diluted EPS came in at 12 cents. Operating cash flow was $75 million. CEO Amnon Shashua called the first quarter a "stronger than expected start to 2026."
Looking ahead, Mobileye is aiming to launch a U.S. robotaxi service in 2027, with an initial fleet of about 100 vehicles and a goal of expanding to 17,000 within five years. This would put it in competition with Alphabet's Waymo, Amazon's Zoox, and Tesla. CEO Shashua told Reuters the plan could "accelerate adoption," though analysts caution about maintaining clear data boundaries and customer economics.
The stock remains well below its 52-week high of $20.18, closing Thursday 52.6% below that level. However, it is 47.9% above its 52-week low of $6.47. This week's rally is significant but still represents a bounce within a broader downtrend over the past 12 months.
Mobileye's next earnings report is expected on July 23 before the bell, with the conference call at 8:00 a.m. ET. Consensus EPS for the second quarter stands at 5 cents.
