Why Mobileye, Not Nvidia, Is Ripe For Short Sellers

Citron Research activist short seller and newsletter author Andrew Left tweeted the firm is taking profits on its previous short position in NVIDIA Corporation NVDA and shifting the position to a short on Mobileye NV MBLY.

Left made a nice profit off of his NVIDIA short, which he disclosed in December when shares were trading at $119. Today, NVIDIA is trading at around $100. Left says he now has a $35 short-term price target for Mobileye, which is down roughly 3 percent on Friday to $46.70.

“At the prices comparing $NVDA to $MBLY, one can easily understand why Mobileye is now ripe as a short,” Left wrote in his new report.

Related Link: Citron's Left: Express Scripts Is The John Gotti Of Pharma, Adds Zero Value To System

He points out that Mobileye's stock currently trades at a significant premium to NVIDIA in terms of P/EBITDA. In addition, NVIDIA has a more robust research budget and a healthier free cash flow situation as well.

Finally, Left notes that Mobileye insiders have been dumping the stock since the beginning of 2016. Citron reports insider sales per employee of $488,000 for Mobileye compared to only $13,000 for NVIDIA in that time.

According to shortsqueeze.com, Left isn't the only one skeptical of Mobileye. The stock currently has a short percent of float of 16.1 percent with 10.0 days to cover.

In the past year, NVIDIA has been one of the hottest stocks in the market, up more than 220 percent. Mobileye has also been a top gainer, up 62.6 percent.

Updating our $NVDA call....switching focus to $MBLY Ridiculous comparison We expect $MBLY to trade short term $35. Insiders tell the story pic.twitter.com/OwuC9xGRSu

— Citron Research (@CitronResearch) February 24, 2017