Mobileye NV (NYSE:MBLY) has my attention today as we begin another week of trading stock options in earnest. Mobileye is a trailblazer in the highly innovative tech world of outfitting vehicles with Advanced Driver Assistance Systems (ADAS) and collision-avoidance technology that will make autonomous vehicles a reality in the not-too-distant future.
Mobileye is specifically involved in developing technologies that make it possible for vehicles to be aware of and to recognize roadway signs, other vehicles, traffic signals, pedestrians, animals, construction areas and bicyclists among others. These intelligent technology modules allow drivers to enjoy some amount of automated steering on highways. The modules also provide automatic emergency braking systems that can detect impending collisions while triggering self-braking as the last resort.
From the aforementioned, even if you have never heard about the company before, you’ll agree that Mobileye might be the next big thing in the tech landscape. I acknowledge the fact that we might not -see a fully autonomous vehicle until sometimes around 2030; nonetheless, we cannot deny the fact that Mobileye has the buzz, interest, volatility and momentum that could reward option traders.
Why We Are Looking At Mobileye Today
Mobileye was founded about 15 years ago and the company filed for IPO in July 2014; hence, the stock is less than a year old in the market. However, the stock has displayed strong volatile trends that might interest option traders. For instance, the stock jumped an impressive 48% on the day of its IPO and it more than doubled its IPO price about two months after going public. The chart below shows how Mobileye has traded since going public last year.
As I have mentioned earlier, the shares of Mobileye jumped 48% on the day of its IPO and the uptrend continued until Mobileye made that $60.28 high. Interestingly, the stock has two support levels – one at $32.5, which acted as the Launchpad to the 52-week high and the second one at $40.
The stock entered troubled waters that saw it crashing towards the key support level of $32.5 as the red arrow shows. Interestingly, the stock recorded another uptrend (second green arrow) that was triggered by the impressive Q4 results that the company delivered on February 26. It appeared that momentum from the earnings release waned towards the end of March and the stock suffered another downtrend to the key support at $32.5.
However, the stock has recorded another uptrend and it is finding support around the $40 once again. In fact, the shares of Mobileye closed at $40.46 last Friday to mark a 30.05% premium to its 52-Week low of $31.11 and to mark a 48.98% discount to its 52-Week high of $60.28.
A Quick Glance at the Financials
The fourth quarter results and solid guidance that Mobileye provided in the fourth quarter has been one of the catalysts for bullish momentum in the recent weeks. Highlights of the fourth quarter results are presented below:
Mobileye delivered revenue of $39.7M to mark a 26.4% year-over-year improvement and to beat the consensus estimate of $36M
The company’s earnings came in at $13.3M or $0.06 to beat the consensus of $0.05
Mobileye reports that Free Cash Flow stands at $15.4M
Going forward, Mobileye expects 2015 revenue in the range of $217M-$218M and EPS of $0.39, above a consensus of $215.2M and $0.38.
How to Trade MBLY Options
I am optimistic about the prospects of Mobileye considering the huge market that autonomous vehicles could command. In fact, Mobileye’s market for ADAS technology continues to grow, as its total addressable market will reach $4.5B to $6B annually in the next couple of months. I recommend buying MBLY call options and you’ll do well to expect the uptrend to reach the $45 mark. Buy the MBLY Jun 2015 45.000 call (MBLY150619C00045000) at asking price of $1.85.
— Daily Option Alerts