A federal judge in the Southern District of New York has dismissed a class action securities fraud lawsuit brought against Mobileye Global Inc., a leading Israeli developer of autonomous driving technologies. The case, led by U.S. pension funds, alleged that Mobileye and its senior executives misled investors by inflating revenue through a “channel-stuffing” scheme that forced key customers to buy more EyeQ chips than needed. Plaintiffs claimed that Mobileye used minimum purchase agreements with its top-tier customers in 2022 and 2023 to artificially boost revenue. They alleged that this tactic misrepresented true demand and enabled a successful secondary public offering (SPO) in mid-2023. When those agreements expired, customer orders plummeted and Mobileye’s stock price dropped significantly in January and August 2024. The plaintiffs argued this decline reflected the market’s realization that earlier revenues were unsustainable.
U.S. District Judge Denise Cote granted Mobileye’s motion to dismiss, holding that the plaintiffs failed to identify any materially false or misleading statements sufficient to support the plaintiffs’ claims. Indeed, in a nod to the transparency and foresight of Mobile Eye and its executives, the Court found that Mobileye had explicitly disclosed the existence of the contracts and the risks of future inventory overhang in its IPO and subsequent filings. In fact, Mobile Eye disclosed that it required its top customers to enter minimum purchase contracts to protect the company from supply chain volatility in the wake of the pandemic. One wonders what claims Mobile Eye would have faced had it not chosen to address that risk through the prudent and disclosed minimum purchase agreements.
The dismissal is a huge legal win for Mobileye, which avoids the costs and reputational damage of protracted litigation. In the short term, the ruling is likely to lift a cloud of legal uncertainty that has weighed on Mobileye’s share price since early 2024. The dismissal removes the threat of discovery and potential damages, which could restore investor confidence and support a modest rebound in the stock—especially among institutional buyers. In the U.S., the decision comes amid broader skepticism over class-action securities litigation, with some judges and policymakers questioning whether such suits deter fraud or simply create costly distractions for companies in competitive industries. The ruling may add fuel to reform efforts aimed at tightening pleading standards or limiting forum-shopping in securities cases.
