Will Seeing Machines’ likely Nasdaq listing elicit a bid?

Rumours that Seeing Machines is planning a dual listing on Nasdaq gained further credibility with the attendance of CEO Paul McGlone at a recent shindig organised by house broker Stifel to promote that very idea to clients. The question is, might a dual listing be the catalyst for a bid?

It’s long been known that a dual listing on Nasdaq has been under consideration at the Aim-listed tech company for a number of years. At a previous investor meeting held online on 24th November 2021 Paul McGlone stated (in answer to the question: ‘Are there any plans to move to a US market?’): “It is in our plan, it’s only sensible that we talk about it. I do imagine that we will end up there but I want to see some additional momentum before we flick the switch on that particular transaction.”

With Seeing Machines coming to dominate interior monitoring with its class-leading DMS/OMS system, it appears that time is drawing close. Indeed, some argue that such a listing would be guaranteed to increase its US profile and enable it to secure more backing from US tech funds.

Stifel served as joint bookrunner on an $85 million dual-listing Nasdaq IPO for Renalytix AI back in July 2020. The price tripled shortly thereafter but has since come right back down. More successful was GW Pharma’s dual listing back in 2013, before it was eventually acquired.

Mobileye IPO

A more appropriate comparison is the Nasdaq IPO of Mobileye, floated for US$5.3bn in 2014, bought by Intel in 2017 for $15.3bn and now in the running for a potential $50bn spin-off IPO, backed by Morgan Stanley. 

Examining the prospectus for the original Mobileye IPO in 2014, indicates that Seeing Machines is set to be a superior business. Not only is it dominant in auto but also in fleet and aviation. Moreover, its robust technology has applications well beyond the transport sector. 

Expected date of dual listing

While it appears that no firm decision has been made by Seeing Machines regarding a precise date for a dual listing, I believe that the much-mooted plan is moving inexorably forward.

My sources indicate that (barring a market meltdown) it is most likely to happen around Spring 2023, by which time Seeing Machines is expected to have achieved several milestones that will have more US tech funds eager to jump in. These milestones include:

  • An order pipeline of $A1bn in auto;
  • A fleet operation that has proven it can scale, boosted by the third generation of its Guardian product, which will be easily incorporated into telematics products for trucks and buses;
  • The launch of a dedicated aftermarket division to sell its Guardian product to niche manufacturers of buses and trucks, with monitoring services sold to their customers; and
  • A licensing deal in the aviation sector.

I also believe that there is an outside possibility that increased momentum in auto and fleet, with Seeing Machines pretty much set to win every contract it contests, could bring forward the date.

Will QC gatecrash the party?

The question is, will the host of chip companies who want SEE’s IP wait until its value has been boosted by a Nasdaq dual-listing IPO before swooping? Moreover, will Qualcomm’s Christiano Amon risk another chip company, or one of the three Amigos (Amazon, Alphabet and Apple) eating his lunch? It doesn’t seem likely. The Arriver acquisition proved Qualcomm fights for want it wants. 

Given the crucial importance of Seeing Machines vision technology to Qualcomm’s Snapdragon Drive automotive stack it seems logical that he will act quickly, to forestall any rival acquiring this important strategic partner. 

Sector ripe for consolidation

The sector is certainly ripe for M&A deals. Even peripheral DMS players are starting to be bought. In fact, one took place late in 2021, with Lattice Semiconductor acquiring computer vision company Mirametrix. The latter has a rudimentary DMS and, according to unnamed sources, went for a ‘huge multiple’ in a private deal. You can see its offering here: https://ir.latticesemi.com/investor-overview/presentations

Note the slide detailing some of the consumer uses for its technology entitled ‘Consumer Challenges’ — it may ring a (door)bell for some investors. The wide range of markets in which SEE’s technology can be used, aside from its transport applications, is one reason it is an attractive target.

Smart Eye would probably love to be taken over as would Cipia. However, SEE is the demonstrable market leader and will be the one that all the major players covet. 

As ever, if you’ve found any value in this article please consider making a donation to a charity of your choice.

The writer holds shares in Seeing Machines.

2 thoughts on “Will Seeing Machines’ likely Nasdaq listing elicit a bid?

  1. I’ve always wondered why they don’t say something like this publicly? Actually I thought I remembered hearing Paul or Ken say it did NOT make sense during one of their interviews? Perhaps/hopefully this is changing!?

    I agree with you by the way. I have come to understand and respect the secrecy of the contract wins – but general Transparency is almost always rewarded by the market. It’s the only thing (remaining) that I believe can explain the company’s share price being so materially disconnected from fundamentals: lack of information during an especially turbulent time.

    Proposed remedies:
    Tell us institutional investors are interested if only the stock was more liquid.
    Remind investors that global regulations for auto safety will provide a strong tailwind for years/decades to come. These are LAWS, not recommendations.
    Tell us there will not “likely” be a need for additional capital (dilution) between now and becoming cash flow positive. This would probably have an immediate positive effect.
    Buy some of their own stock outside of performance grants!
    Tell us how the company is impacted by Ukraine, chip shortages, auto industry supply issues – especially if the effect is smaller than one would fear.
    Tell us how Fleet is doing quarterly like they used to.
    Tell us how Caterpillar licensing relationship is going? Because until very recently, materials and mining seemed to be a hugely important sector for capital investment.
    Tell us potential range of outcomes related to a similar aviation deal? How might it look? Is it even possible (engineering, regulatory, cost of plane downtime) to retrofit a plan with SM technology, or does it have to be a new build? Or just in simulators?

    Hopefully they still read this blog 😉
    Cheers to the second half being a lot better than the first half of the year…

    • Mitch, that’s a very interesting post. Thanks. I tend to agree with much of it. It’s clear that lack of transparency has held this stock back. As ever, my hope is that this changes very soon.

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.