$SEYE 30% Down in one Day — The Brutal Market of 2026 - but IFRS in Q3 might transform H1 2026 to positive EBIT

We’ve now seen Klarna and Smart Eye both fall brutally after reports that were quite good.

This kind of drop used to only happen when a company announced a share issue with a 35% discount, or when a fraud was uncovered, or when a major customer walked away. Not when companies deliver double-digit organic growth, expanding margins, and/or reaffirmed guidance (Klarna did not, that was their issue) .

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But apparently in 2026, if you have a challenging history of missed promises, you get hit hard even when you deliver good numbers. Even if you have not promised anything, SEYE had not guide any numbers, but the market expected more.

Klarna certainly has that history. Peak valuation of $45.6 billion in 2021, collapsed 85% to $6.7 billion by 2022. IPO delayed multiple times. Listed in September 2025 at $15.1 billion, 69% below peak. Still unprofitable through H1 2025 despite years of promising the turn to sustained profitability. When Klarna beat every Q2 estimate on August 18 and trimmed 2026 guidance by 5-6% due to German consumer weakness, the stock fell 22% in a day and 30% for the week, the worst week since IPO.

Smart Eye has its own version of that history. Analysts published aggressive base case targets of SEK 155-160 in 2020-2022 that did not materialize. Affärsvärlden projected SEK 1 billion in revenue for 2026 back in January 2024. The stock fell from over SEK 250 in 2020-2021 to below SEK 50 in 2024. Repeated share issues to fund the gap between contract wins and revenue realization. A market that had been trained to distrust the timing of the inflection.

I want to walk through Smart Eye’s actual Q2 report using the slides the company presented today and explain why I’ve mostly been shaking my head and laughing at the market’s reaction while increasing my position on the dip.

I’m long SEYE, with a 3–6x share-price target in 2026. I’m not particularly concerned that roughly SEK 30 million in revenue was “delayed.” But let’s dig into today’s report.

Slide 1: The Q2 Summary the Market Ignored

Look at this slide honestly and tell me this looks like a damaged business breaking down:

• Net Sales SEK 141M with +54% organic growth
• EBITDA SEK 27M, improved by SEK 26M year-over-year
• Automotive organic growth +128%
• Automotive License growth +200%
• Car models reached production: 175 (up from 155)
• OEMs reached production: 20 (up from 15)
• Free cash flow improved by SEK 14M

The two negatives on the slide: Behavioral Research -7% (management said this stabilizes and Q4 seasonally stronger) and OPEX excluding amortization -17 MSEK (planned investment in sales & marketing plus salary revisions).

This is a company at operational inflection. The market chose to focus on the fact that Redeye had estimated Q2 Automotive at SEK 122M and it came in at SEK 93M. The delta between “excellent” and “aggressive-sell-side-fantasy” got priced as failure.

My favorite picture to use in these cases is this one:

379 Design Wins

This slide is central to the long-term thesis and it hasn’t changed today.

The yellow line is total design wins accumulated since 2016, at 379. The green line is design wins that have entered production, currently at 175. The red line at the bottom is exited wins, only 15 out of 379, a 4% attrition rate.

The remaining SEK 7.6 billion in future order value from these design wins is real. It’s already contracted. The question was never whether these wins would deliver revenue, the question was always about the timing of the ramp.

175 in production today. Management confirmed all active design-wins will be in production before end of 2030. That’s what the CEO said explicitly on the call.

If you take that guidance at face value and I do, because it’s a stated commitment against a contractual backlog, not a hope then between now and 2030 an additional 204 design wins enter production. That’s 51 additional wins per year on average, which is consistent with the acceleration slope we’ve seen since 2023.

Where the Automotive Ramp Actually Stands

This is the most important slide from today for understanding the near-term trajectory. 175 models in production at end of H1 2026. Guidance for full year 2026: 200-250 (250 is the stretch target, 200 is base). But here’s what the CEO said on the call that’s not visible on the slide:

“80% of the 175 models currently in production are actively producing at full rate today. The remaining 20% will reach full production during Q3”. My added comments is that Automotive always has a much stronger volumes in Q4 every year.

“25+ accelerating in 2H 2026”. Minimum 25 additional model starts in H2 2026, then acceleration in 2027.

“Most is coming in before end of 2030”. The remaining 204 design wins (379 total minus 175 in production) enter production between now and end of 2030.

Think about what this means for Q3 alone. If 35 models transition from partial to full production, and 12-15 new models start production in Q3, the aggregate production volume increases roughly 30-35% sequentially. The Q3 report on November 17 has structural tailwinds that Q2 didn’t. There guidance hence looks quite good for rest of 2026.

The Per-Vehicle Pricing Story — SEK 7.6B Order Value

SEK 7.6 billion in future order value from the current design wins. Let me walk through what the CEO said about per-vehicle economics because this changes how you should think about future revenue.

Current per-vehicle royalty: 3-10 Euro per car. That’s SEK 34-113 per car depending on contract vintage.

Why the current blended average is at the lower end: contracts signed in 2020-21 during the DMS market ramp had lower pricing to secure market share. These contracts are what’s driving production volumes right now, hence the lower blended ASP that Redeye estimated at SEK 42.

Why low-cost cars pull the average down: for low cost vehicle models, GSR compliance is a legal requirement, not a value driver. OEMs pay minimum viable royalty to check the regulatory box.

Why future cars carry higher per-vehicle value: future models don’t just have DMS. They have DMS + Interior Sensing + posture detection + face ID + iris ID + intoxication detection. Each function adds royalty layer. The CEO said future cars have “high value” per vehicle from this bundle of features.

This is the pricing expansion story that Redeye’s SEK 42 estimate captures for 2026 but doesn’t capture for 2028-2030 when Interior Sensing and adjacent features become standard.

If per-vehicle royalty expands from SEK 42 in 2026 toward SEK 70-90 in 2028-2030 as newer contracts with higher feature content dominate the mix, plus vehicle production volume grows 3x and royalty revenue expansion on ASP0 This is what I like to hear and that support my long term estimates.

The Financial Trend the Market Missed

R12 Net Sales: SEK 488.8M, up from SEK 361.6M, that’s +35% year-over-year on trailing twelve months.

The rolling 12-month chart on the left tells the real story. Net sales R12 turned the corner in Q4 2025 and has been accelerating each quarter. Q2 2026 at SEK 140.9M is the highest single quarter in company history.

The waterfall on the right shows how Q2 2026 built to SEK 141M from Q2 2025’s SEK 92M:

• Automotive contributed +SEK 53M (the main growth engine)
• Behavioral Research contributed -SEK 4M (the temporary headwind)
• Sightic acquisition contributed +SEK 3M
• FX effect contributed -SEK 3M

The organic Automotive contribution alone was +58% of the total sales base from a year ago. This is not a company decelerating.

R12 revenue growth of +35% with +43% organic. Q2 organic growth of +54%. That’s an accelerating pattern.

EBITDA Trajectory and the IFRS Question

This slide might be the most important one for the medium-term thesis.

• Q2 2024: EBITDA -22.5M
• Q2 2025: EBITDA +3.6M
• Q2 2026: EBITDA +31M (adjusted for one-time items)

The rolling 12-month EBITDA line is now trending upward at approximately +80 MSEK annualized run-rate. This is the operational leverage the company has been promising for years finally showing up in the numbers. How can this warrant a 30% drop in share price. This is hilarious, who is it drivning such a sell off based on this kind of fantastic development?

Now to the note the market completely missed: “Q3 IFRS?”

On the earnings call, the CFO confirmed again that Smart Eye is transitioning from K3 to IFRS accounting starting Q3 2026. This is not a cosmetic change. It fundamentally changes how the reported P&L looks.

The IFRS Impact That Changes Everything on EBIT

Look at the Q2 report’s balance sheet:

Goodwill on the balance sheet at end 2025: SEK 453.2 million.

Under Swedish K3 accounting, goodwill is amortized systematically over its useful life, typically 5-10 years. Smart Eye amortized SEK 85 million of goodwill in 2025 alone. That’s SEK 21 million per quarter.

Under IFRS, goodwill is not amortized. Instead, it’s tested annually for impairment. So starting Q3 2026, that SEK 21 million per quarter charge disappears from the reported EBIT line. This is also a big deal for 1H and full 2026. When Smart Eye reports Q3 on November 17, the retroactive IFRS restatement will show that H1 2026 was already profitable on an EBIT basis, not the loss that was reported using K3.

H1 2026 EBIT under IFRS (estimate):

• H1 2026 K3 EBIT: -SEK 36,5M
• Plus H1 goodwill amortization (SEK 21,4M × 2 Quarters): +SEK 42,8M
• H1 2026 IFRS EBIT: approx.: +SEK 6,3M positiv

Q3 has a genuine chance to show positive reported EBIT for the first time in company history. Not only because operations changing. Also because the accounting standard changed to match global software peers.

This matters since many institutional funds have mandate restrictions against companies reporting operating losses regardless of underlying economics. Smart Eye transitioning to reported operating profit unlocks a broader institutional investor base.

Also, comparison to peers becomes cleaner. ARM Holdings, Cadence, Synopsys, none of them amortize goodwill because US GAAP doesn’t require it. When Smart Eye moves to IFRS, apples-to-apples comparison finally works.

What I Got Wrong in My August 11 Post

Before continuing I want to be transparent about two errors in my original piece.

First, I anchored the Q2 estimate on Redeye’s aggressive number published three days before I wrote. Actual Q2 Automotive came in at SEK 93M vs Redeye’s SEK 122M. The peer read-through from Seeing Machines Redeye used didn’t translate mechanically to Smart Eye. I should have been more sceptical of that.

Corrected 2026 full year estimate: SEK 640-650M, still +55-60% year-over-year growth, still Rule of 40 above 70. The market is not inline with this is clear, since the share dropped 30% in a single-day drop on a report that showed +128% organic Automotive growth.

Valuation After the Drop

At SEK 66.40 today Smart Eye’s market cap is SEK 2.6 billion. On R12 revenue of SEK 488.8M growing 35%, that’s 5.3x P/S. On corrected 2026 estimate of SEK 645M, forward P/S is 4x.

Peer benchmarks:

• Cerence (Rule of 40 = 3, declining revenue): 3-4x P/S
• Synopsys (Rule of 40 = 49): 12x P/S
• Cadence (Rule of 40 = 51): 15-17x P/S
• ARM Holdings (Rule of 40 = 71): 25-30x P/S

Smart Eye on Q2 numbers (+53% revenue growth + 19.5% EBITDA margin = Rule of 40 = 72) trades at Cerence multiples despite ARM-level fundamentals.

a) Either something is structurally broken in the business that management is not disclosing, b) I am as insane as the X account insane_analyst or c) the market has totally lost confidence in SEYEs and it is a truly damage stock not a damaged company, as the market value it as of now. I bet on the last c)..but it can be b) the as well :-). Time will tell.

Why I Bought More

I bought more today for four specific reasons:

First, the operational data confirmed the thesis. +128% organic Automotive growth. +200% royalty acceleration. 175 models in production with 80% actively producing today. This is not a business breaking down.

Second, the 2030 visibility got clearer. Management said all design wins will be in production by end of 2030. That’s not a hope. That’s a stated commitment against a SEK 7.6 billion contractual backlog. The cohort thesis just got stronger.

Third, IFRS transition changes the Q3 optics dramatically. The K3 goodwill amortization of ~SEK 21M per quarter goes away. Q3 has a real chance to show positive reported EBIT for the first time ever. Psychological threshold that unlocks broader institutional investors.

Fourth, the math got better. From SEK 66.40 to my 2030 target of approximately SEK 300-600 (bear/bull) is roughly 9-10x return, or approximately 74% IRR over four years. From the original SEK 97.96 entry it was 6x, or 58% IRR. Same target, better entry.

What Would Change My Mind

I want to be honest about this because publishing an investment thesis means holding it accountable.

If Q3 on November 17 shows material deceleration in royalty growth, that changes the picture. If design wins in production come in below 200 at year-end, the ramp curve is broken rather than delayed. If management guidance for 2027 comes in dramatically below current cohort trajectory, the long-term thesis needs recalibration.

None of these happened today. What happened today was that Q2 came in below aggressive estimates while confirming the underlying trajectory. That’s what got sold at 30% in a day.

Closing Thought

I don’t have confidence about the next few weeks. Stocks that drop 30% in a day often keep drifting lower as momentum unwinds and forced selling completes. Smart Eye may trade lower before it trades higher.

What I have confidence about is the operational trajectory and the 2030 target. If management delivers on 200-250 models in production by year-end, IFRS-adjusted positive EBIT in Q3 and all design-wins-in-production by 2030, then today’s SEK 66.40 is going to look like a gift in hindsight.

Klarna beat every estimate on August 18 and fell +30% in a week. Smart Eye delivered +128% organic Automotive growth today and fell 30% in a day. This is what the 2026 market does to companies with a history of missed promises even when they deliver.

I’ve done my homework. I bought more at these levels. I’m targeting approximately SEK 600 by 2030.

The market can do whatever the market does between now and November 17.

Anders StormDisclosure: The author holds positions in stocks discussed in this publication, including Smart Eye. Position sizes and timing are not disclosed. This analysis is for informational purposes only and does not constitute investment advice. Readers should conduct their own due diligence and consult licensed advisors for personal investment decisions.

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