It has been a few months since my last post, so I'd be remiss to not say congrats to @mcd and the rest of the @commonstock team for the acquisition by Yahoo Finance! The team, community, and @nathanworden especially have made me feel welcome on this platform since literally day one, when I asked, "Question as someone who created their account today, why do some people on here not share their portfolio?"

I've been so impressed with the growth of Commonstock since that fateful day when my silly question made it to the top of the daily news feeed, and I can't wait to see what's in store next.

With that out of the way, let's get down to brass tacks. I recently initiated and scaled into a significant Mobileye position, totaling 13.7% of my portfolio as shown below.

After reviewing and writing about Mobileye's S-1 Filing (Prospectus) before the company's IPO in November of 2022, I've been patiently monitoring the company's execution and share price, waiting for the right moment to strike.

Much to my disappointment, shares never truly dipped below its debut price despite a challenging market for non-mega cap technology companies from IPO in late 2022 to the present day.

Despite my frustrations, at the very least, the movement of Mobileye's share price made sense to me. The company executed well and built up an impressive record pipeline.

When the price dipped from an ATH of $48.11 to around $34, and after extensive due diligence, I decided to pull the trigger. Let me share with you my investment thesis, starting with the company's background.

For those who didn't read my S-1 post last year, I'll re-hash the basic info for you.

Mobileye’s technology platform, which is built to enable the full-stack of autonomous solutions, is based on five pillars:

Mobileye’s Solutions & Roadmap:

Mobileye is the undisputed leader in ADAS today, with a 69% market share reported in January 2023. ADAS, also known as Level 2 (L2) autonomy, consists of the features considered as standard safety features in cars coming out today; blind spot monitoring, adaptive cruise control, front collision warning, etc. These features, if not already mandated by governing bodies across the world, soon will be required by new cars across the board.

These mandates are an obvious tailwind for Mobileye, backed up by design wins announced earlier this year, totaling $17B+ in just ADAS pipeline. In a noted down-cycle for the business, the company is at or around GAAP breakeven (-.04 EPS in Q2) with a 49% gross margin. For the next twelve months (NTM), $MBLY at $34.26 (28.31B market cap) has a forward PE of 41.97.

While these historical and NTM metrics are valuable to know, I believe that to understand the step change in business that Mobileye is about to undergo, it is also necessary to understand the current and future pricing model of the company's products.

For each ADAS system, making up the vast majority of trailing revenue, Mobileye makes ~$50 per unit. Very economical, which is a likely reason why Mobileye systems have been installed in 125 million vehicles since the company's inception 20 years ago.

The SuperVision system, currently in production and starting to ramp, generates anywhere from $1300-1500 per unit depending on the configuration. The fully autonomous systems, including Mobileye Chauffer and Drive, can go into the thousands of dollars per unit.

Mobileye is at a critical inflection point in pricing, so the billion dollar question is, do the company's autonomous driving products have the market demand to scale the company to the next level?

With Tesla taking most of the self-driving news cycle in the United States, it's easy for Mobileye to fly (drive) under the radar.

In 2022 the company sold 90,000 units of the Zeekr 101 equipped with SuperVision technology (the $1300-1500 system), generating positive press across the board in China, where the car is rolling out first. And starting in Q1 2024, there will be 5 cars with SuperVision in production.

This includes 2 Zeekrs, the Polestar 4 (recently announced), a vehicle from Smart, and a yet to be announced brand. Low volume from Vinfast could also happen in 2024, and then the company has a design win with Porsche that launches in mid-2025.

Looking towards future design wins, CEO Amnon Shashua said in the Q2 earnings call that Mobileye "...can now count nine large established OEMs prospects in what we consider advanced stages for products like SuperVision and Chauffeur. In most cases we are not competing against anyone."

In the Q&A, Shashua expanded on the notion by defining these prospects as engagements in which "...engineers are fully aligned with Mobileye, that Mobileye is the right path forward in terms of technology, performance and cost, where we already are in production, executing an official product program or in a funded physical concept phase."

He also noted that "we still see high likelihood of significant design win announcements in the second half."

So far, we've established that Mobileye has (1) a sustainable ADAS business providing the company with consistent, predictable cash flow (2) an upcoming inflection point in pricing that will drastically boost margins and revenue prospects (3) an expanding pipeline for the future self-driving products, with catalysts all but guaranteed for the second half of this year.

But what about the competition? Surprisingly, I've only mentioned Tesla once so far in a post related to self-driving, so let's take some time to address the competitive landscape.

In a recent Goldman Sachs conference, Analyst Mark Delaney asked Mobileye Chief Communications Officer Dan Galves the following "...Tesla aspires to be a competitor, and they said they're open to licensing their FSD technology to other OEMs. Have you seen that impact your discussions at all with OEMs? And are you seeing them as a competitor in the marketplace?"

Galves responded with "...we haven't seen any impact from that... it's not the first time that Tesla has said that they'd be willing to kind of license or sell their self-driving technology to other automakers. I think that it's funny because this sense of urgency that's been created in the industry, we feel like is more related to Chinese automakers than Tesla."

Outside of Tesla, Nvidia and Qualcomm are Mobileye's other two potential competitors as providers of high-powered, open compute platforms.

To paraphrase Galves' commentary on the dynamics with Nvidia and Qualcomm, automakers evaluating those platforms realize that internal development efforts to write software on top of Nvidia/Qualcomm hardware end up being significantly more costly than going with Mobileye, with teams designing and developing the full software and hardware stack exclusively for automotive.

Additionally, Intel's acquisition and subsequent incubation had the benefit of enabling open compute for Mobileye, which used to be the advantage of going with Nvidia or Qualcomm. Mobileye now has something called EyeQ Kit, which consists of tools, libraries, and software development kits (SDKs) for automakers to deploy their own code.

The EyeQ kit allows automakers to fine tune their system's driving experience using 500-600 virtual knobs, from making lane changes more passive to giving the car a more aggressive feel.

As investors, we have a rare line-of-sight to both not only where the automotive industry is heading (ADAS and self-driving), but also where Mobileye is going with their rapidly expanding pipeline of opportunities to capitalize on.

I think that the next few months are a rare opportunity to accumulate shares before design wins start rolling in, and the broader market recognizes the growth prospects that I've laid out in this post.

I will continue to update everyone on my position, and as always, please let me know if you have questions about anything that comes to mind after reading this post. I'm here to help!

Link to hack news: https://www.washingtonpost.com/national-security/2023/07/12/microsoft-hack-china/

​

Link to Security Service Edge (SSE): https://www.microsoft.com/en-us/security/blog/2023/07/11/microsoft-entra-expands-into-security-service-edge-and-azure-ad-becomes-microsoft-entra-id/

​

This isn’t the first time Microsoft has been hacked, and it certainly won’t be the last. The broader market believes that Microsoft will dominate cybersecurity as a result of their bundling GTM that worked for Teams, among many other products.

​

However, I strongly believe that “good enough” isn’t good enough for cybersecurity, and countering the advanced persistent threats that continue to target individuals, companies, and governments across the world. When enterprise spend comes back after what I believe is currently a trough, I think that best in breed solutions like $CRWD, $S, and $PANW will bounce back in a big way.

​

Disclosure: Long $S.

I’ve been actively trading over the last month so I wanted to do a lil’ mid-month catch up. I’ll describe the general trades with rationale (when applicable) below.

As you can see below, I’m up around 100% in my (small) options account YTD. I slowly scaled out of the 3 $LYFT calls, taking profit at 50-250%. I was trying to wait and see my thesis play out, but decided to take the free money and run.

$LRCX: Increased my weighting by 11%, making it my largest position. Despite the recent rally in semiconductors, I think Lam Research has room to run; with an abundance of catalysts and tailwinds on the horizon with AI and Moore’s Law.

$SNOW: Trimmed slightly after a weak earnings report and guide. I’m still extremely confident in Snowflake, but brought it in line with my other overweight positions. Just like Lam, I think Snowflake will be a winner as a result of the platform shift we’re seeing with AI proliferation.

$SCHW: Ever so slightly increased my position size. I’m very comfortable with Schwab staying near the top of my portfolio allocation, but am monitoring net new assets and accounts, which they report on monthly.

$S: Significantly averaged down on SentinelOne when they dropped by 30%. I purchased large blocks of shares at $13.05 and $13.71, bringing my average down to $14.97. I didn’t want to be overweight here, but felt like my hand was forced below $15/share.

$SDIG: Small buys. Slowly accumulating while trying to stay confident in my thesis despite negative price action.

$UPST: Trimmed at around 100% profit to shift capital to $LIDR. Nice to see the market recognize the deep value I saw below $20/share.

$LIDR: Doubled my allocation. The price still doesn’t make sense with their net cash position and roadmap. I think the market will catch on eventually.

$HYLN: No change.

$SLDP: Trimmed significantly after some recent strength. I didn’t time it perfectly as Solid Power saw a bit of a run with the CEO announcement, but since I see the company as a 2025 and beyond play, I don’t feel the need to maintain a more than underweight position, especially with what I see as excellent opportunities for alpha in the current market.

CRN put out a great interview with SentinelOne CEO Tomer Weingarten about their new Purple AI assistant, partnership with Wiz, and cloud security opportunity among other topics.

​

Check it out here: https://www.crn.com/news/security/sentinelone-ceo-on-microsoft-s-security-copilot-it-s-a-nice-chatbot-/1?itc=refresh

​

I closed out one of my two 143DTE 9Cs for $LYFT, leaving me with the two contracts shown below. Can’t complain about a quick 50% scalp.

​

​

​

For $LIDR I’m happy with the big jump today, but recognize it’s not at all based on my thesis - just a macro, beta-based move for a small cap stock. Looking forward to seeing what news does come out for the company in the upcoming weeks and months.

​

Today I closed out my $S calls at 50% profit, which I feel good about since I still have significant exposure to the stock with shares.

​

I rolled some of that cash into $LYFT calls, shown below.

​

​

I think that Lyft has been appropriately beat down for their past performance. However, I think the market is discounting some fundamental catalysts that could be on the short-term horizon for $LYFT.

​

The Lyft CEO stopped short of saying they’re seeking a sale, but mentioned recently that while the company is “not on the block,” the ride-hailing company would be “open to offers”.

​

$LYFT would be a no brainer acquisition at this price for a self-driving car company (e.g, Amazon/Zoox, Motional, Apple, Mobileye, etc.) who wants an instantly available network app that is already on everyone’s phone. The company and shareholders would still demand a premium, which would certainly above the share price today.

​

After $UBER’s recently announced partnership with Google’s Waymo, the pressure is now on Lyft to catch up or sell. I think that similar to Google/Bard after Microsoft launched OpenAI’s ChatGPT, that Lyft is likely to feel the pressure to announce an expanded partnership agreement if they don’t sell.

​

They already have a pilot program with Motional in Las Vegas, which they plan to expand, so an announcement about that would be bullish for the company. And the same goes for all of the companies I listed for a potential buyout - I think both Mobileye & Amazon/Zoox, among others, would be foolish to not strike a sweetheart partnership deal with Lyft while the iron is hot.

​

TLDR: AEye at $30m is an enticing risk/reward and alpha opportunity. The company is trading at less than half net assets, extended its runway to the end of 2024, and has a floor based on the value of its LiDAR IP that I believe is above the current stock price. I initiated a position today at $0.19.

​

AEye, Inc. is a technology company that develops artificial intelligence (AI)-powered lidar systems for vehicle autonomy, advanced driver assistance systems, and robotic vision applications.

Luis Dussan, a leading aerospace designer of targeting systems for fighter jets, understood self-driving cars would face similar challenges: the need to see, classify, and respond to an object in real time. Luis founded AEye in 2013 where engineers from NASA, Lockheed, the USAF, and DARPA created AEye’s patented 4Sight™ lidar platform, key to the rollout of sensing applications for automotive, trucking, smart infrastructure, logistics, and rail.

AEye has partnered with leading automotive manufacturers and Tier 1 suppliers to develop and deploy its lidar systems. The company's lidar systems are currently being used in a variety of prototype and production vehicles, including the Continental Automated Truck (CAT) and the Toyota Sienna minivan.

​

In 2021, AEye went public through a merger with a special purpose acquisition company (SPAC).

​

Down from an ATH around $14/share $LIDR is now down to $0.19, equating to a market cap of $30m.

​

The company is trying to turn over a new leaf after an obviously rocky debut to the public equity market, with a new CEO and CFO appointed in the last 3 months. In order to extend their runway in a challenging funding environment, AEye made a decision that is becoming more and more common in 2023, cutting 1/3 of their staff and trimming expenses such as professional services (e.g. consultants) and real estate.

​

The new management team and slimmed-down workforce are now focused on one thing: validating and delivering their HRL LiDAR product jointly developed with Continental ($CTTAY). This is a great segue to why I believe AEye is such an enticing arbitrage opportunity.

​

Companies who have lost the faith of equity markets typically trade around the equivalent of their net cash/asset balance, signifying that investors think that management is too incompetent to get above a 1:1 return on the investment of said cash/assets. At the current $30m market cap, AEye trades at 40.25% of net assets. I'll state below why I think that this valuation is far too harsh, based on an underappreciated roadmap and price floor.

​

The HRL131 Long Range LiDAR, jointly developed with Continental, is the reason I believe that $LIDR is a significantly underappreciated stock.

​

Continental, an international company that trades at a $15B market cap, is more than just a strategic partner and investor to AEye. They are also the first company that I've seen get on a partner company's quarterly earnings call to reaffirm their confidence in the product and vision.

​

Norm Hammerschmidt, Vice President of the Components business at Continental went on AEye's Q1 earnings call this May to say the following:

​

"I would like to start by saying that Continental is very pleased with the new management and the go-forward plan presented by AEye. AEye's decision to take an automotive first strategy further strengthens our partnership and provides the focus and velocity needed to secure automotive series production awards and expand our LiDAR business case. As a 150-year old automotive Tier 1 supplier, we at Continental deeply understand the processes, time and capital required to industrialize products for passenger and commercial vehicles, so when we choose partners like AEye, we do so with our brand and reputation with OEMs in mind. We are as committed to AEye today as we were 3 years ago when we began this journey. And even more so as we work together to accelerate through the design validation stage, which is a precursor to OEM integration and higher volume production.

​

The Conti and the AEye engineering teams are working collaboratively during this stage to perform stringent accelerated life cycle testing on the HRL131 Long Range LiDAR products in our labs while also replicating real-world scenarios in a variety of adverse weather conditions at our closed course tracks in Michigan and Germany. In parallel, our business teams have progressed tremendously on quoting activities with multiple large volume LiDAR programs from both passenger and commercial vehicle OEMs, where we believe we are well positioned to win. As the global leader in ADAS products, Continental began this journey with AEye with a belief that the automotive LiDAR adoption curve will mimic that of radars, which saw exponential growth over the last 25 years, and these recent RFQs from OEMs confirm our belief. The future looks very bright for our LiDAR market and our partnership with AEye."

​

In short, Continental believes strongly enough in AEye's product to center their own autonomous driving and trucking roadmap around their jointly developed HRL131 long range LiDAR. This HRL131 product, according to Continental's website, "enables new compelling automated driving features and will be ready for mass production starting in 2024."

​

AEye and Continental are currently in the OEM validation process with the LiDAR, likely including companies such as Aurora Innovation ($AUR). This tweet from Continental Press shows an Aurora truck featuring the HR131 powered by AEye, which has not been publicly reported or acknowledged by AEye. At this low of a market cap, any positive press could send the stock upwards in a hurry.

​

The new and improved AEye has a streamlined product roadmap, supported by an established partner in Continental, that not only gives the beat-down company an opportunity to succeed and thrive, but gives the company a buyout/investment floor at or above the current stock price.

​

I initiated a position today at $0.19 and plan to slowly scale in if the price drops or stagnates in the current range.

Conference Link: https://wsw.com/webcast/jmp58/snow/1714700

Participant(s): CFO Mike Scarpelli

There was a lot of useful, novel information in this jam-packed 20 minute conference appearance from CFO Mike Scarpelli. The big takeaways for me were the public sector opportunity, which I've confirmed to at least anecdotally be true from my channel checks, and how durable the sales runway is for the company. We all know about the Snowflake's guidance for $10B revenue in 2028, and the more I learn about Snowflake's expanding TAM and execution the more I think they would have to try to not meet the lofty-sounding goal.

​

YouTube Link: https://youtu.be/bS9FYKNQs3E

​

Highlights:

​

My Take:

I love this company. Hyliion continues to de-risk their product timeline and be one of the only de-spacs to not only meet and exceed their investor presentation goals, but also have enough cash on the balance sheet to not raise any capital.

​

There was some groundbreaking news in this interview that wasn’t mentioned in their last earnings call - specifically around the versatility and potential of the Karno generator.

​

For the uninformed, the Karno generator is a 3D printed generator out of GE’s aviation unit that is on the roadmap to power the second generation of the Hypertruck.

​

If what Healy says is true about there being a demand in the military and general commercial power supply markets in general, Hyliion just experienced a massive jump in TAM. And yet this company remains at a $400m market cap - right above their available cash balance.

My Take:

Not only is a bank run not happening at Schwab, clients are depositing assets at an record rate. On Friday alone clients deposited $4B net new assets - and have averaged $2B per day in March.

Bettinger also bought 50,000 shares at market open today according to Sarah Eisen of CNBC.

Source: https://twitter.com/saraeisen/status/1635697859537272832?s=46&t=2hT-ude3Uk77R784GHIIoQ

I just initiated a massive position in $SCHW at $48, now second to only $SNOW in my portfolio after the stock dumped 20% today and 45%+ in the last week. Easy buy after the CFO came out today to say that the “business continues to perform exceptionally well” with access to “significant liquidity” and “more than 80% of total bank deposits falling within FDIC insurance limits.”

​

Oh, and they also got an upgrade from Citi to Buy.

​

​