Mobileye shares surged immediately after the company’s strong earnings report, but they plunged right after the company said its relationship with Tesla Motors will end with the EyeQ chip. However, one analyst says the ending of this relationship won’t really make much difference for Mobileye.

He also suggests that the fatal accident in which Tesla’s Autopilot system was engaged might have had something to do with the two companies ending their business relationship—but not for the reason you might think.

Tesla Motors TSLA

Tesla loss no real loss

In a report dated July 26, RBC Capital Markets analyst Joseph Spak said he estimates that Tesla made up less than 3% of Mobileye’s sales last year. He estimates that Tesla was only 2% of Mobileye’s 2019 guidance and notes that the company didn’t change its outlook for 2019. Mobileye will keep supporting and maintaining Tesla’s Autopilot program.

As a result, losing the automaker isn’t “financially material,” he explained. He explained that the main impact the loss of Tesla will have is on sentiment surrounding Mobileye. The sensor maker didn’t have much to say about what resulted in the loss of that business relationship, and Spak believes that management was limited in what they were able to say.

Did the Tesla Autopilot crash impact the breakdown?

Mobileye also explained that in the future, autonomous driving will require partnerships with more than just traditional automakers and suppliers. Spak framed the company’s comments with the recent Autopilot-related crash, and in his view, he believes it’s possible Mobileye is concerned about risk to its reputation. Specifically, he believes Tesla might be “trying to push the technology beyond what it was meant to do (at any given time).”

“This appears to be MBLY taking extra prudence on the safety/reputation angle recognizing the large opportunity they have ahead on autonomous driving,” he mused. “We don’t believe this will portend other automakers taking similar actions.”

We have reached out to a Tesla spokesperson to see if they have any comments on Spak’s speculations and will update this article if a comment is received.

What Mobileye actually wants to do

The analyst pointed to the company’s partnership with BMW and Intel as a potential “model” for what it wants to do going forward. Most importantly, the goal of that partnership is standardization of autonomous driving technology, and the three parties are open to other automakers entering into the partnership.

Spak advised investors to take advantage of the sell-off in Mobileye shares. He noted that the company raised its full-year guidance for this year. Management’s sales outlook now stands at $344 million to $350 million, compared to their previous guide for $336 million to $340 million. Their guidance for earnings moved up from between 68 cents and 69 cents per share to a range of 70 cents to 71 cents per share. Spak rates Mobileye at Outperform with a $53 price target.

Mobileye’s earnings results solid

Mobile beat earnings estimates on the top and bottom line for the second quarter. Revenue was 8% higher than consensus, coming in at $83.5 million, compared to the $77 million expectation. Non-GAAP earnings were 17 cents per share, beating Wall Street’s estimate by 2 cents. Analysts from RBC and Evercore ISI noted that the revenue beat came from the Aftermarket segment. Chris McNally of Evercore said consensus for Aftermarket revenue was between $12 million and $13 million, but Mobileye reported $19.1 million. OEM revenue came up short at $64.4 million, compared to the consensus of $65.5 million, added McNally.

Shares of Mobileye declined by as much as 7.55% to $45.48 during regular trading hours on Tuesday.