No doubt you’ve heard all about Google parent, Alphabet’s self-driving car development business called Waymo. It is long speculated that they will spin Waymo off as a public company, so for all the investors out there, here is what you need to know before investing in Waymo stock.
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Will You Invest In Waymo Stock?
Alphabet (GOOGL), Google’s parent company, is turning out its self-driving car fleet, from the research lab to its own business called Waymo. Originally a Google project, Waymo became a stand-alone company in 2016 and started a trial of a self-driving taxi service in December 2018.
Waymo stock looks to be a safe bet, especially if Alphabet’s performance for the last few years is anything to go by, but let’s look at some factors that are likely to influence Waymo stock.
What is Waymo?
Waymo stands for “a new way forward in mobility.”
The firm is building on technology developed in Google’s labs in 2009 and is on a mission to make it safe and easy for people and things to move around.
One million, three hundred and fifty thousand people die each year in road accidents around the world. Around 94% of crashes involve a human error in the US, killing over 35,000 people a year. Waymo is inspired to reduce this figure and help mobilize people that can’t drive, such as the elderly or disabled.
Waymo One is a public self-drive service a bit like Uber and Grab, which uses an app to call a car. The current setup is only in several cities in the Metro Phoenix area, but they hope to expand exponentially. Some cars include trained drivers, but Waymo plans to add more self-drive vehicles over time.
In March 2020, Waymo borrowed $2.5 billion from a group of investors to develop its services. An additional $750 million was raised in May 2020, taking their external funding to $3 billion.
The funds will strengthen the investment in technology and operations, mainly because of the likes of Andreessen Horowitz (also called a16z and AH Capital Management, LLC), Mubadala Investment Company PJSC, Silver Lake, AutoNation, and Magna International Inc. are involved.
Magna, a Canadian mobility technology company for automakers, in particular, will add weight being one of the largest companies in Canada, and also recognized on the 2019 Forbes Global 2000 (annual ranking of the top 2,000 public companies in the world).
Although Waymo has not disclosed the amount of each investment, the total infusion of money will set the company up to commercialize its self-driving technology.
John Krafcik, Waymo’s CEO, said, “…we’re expanding that team, adding financial investors and important strategic partners who bring decades of experience investing in and supporting successful technology companies building transformative products. With this injection of capital and business acumen, alongside Alphabet, we’ll deepen our investment in our people, our technology, and our operations, all in support of the deployment of the Waymo Driver around the world.”
However, if more people decide to work longer and save less, what damage will this do to our society?
Currently, the statistics show that people aren’t saving for retirement even though they plan and assume they will retire. If people believe they can work later and preretire, what are the chances that they will save any money at all? Will they plan to work forever or simply rely on government benefits?
Pretirement could be a necessity for some but a preferred choice for others. Those without means for traditional retirement might have to carry on working, but this can be restrictive. It can also potentially be more expensive, having to insure against events that could hinder ongoing payment.
The capability to earn an income is never guaranteed. Many people who want to continue work have their jobs terminated, for example, through failed businesses. As we get older, our health naturally deteriorates, and family problems can change well-laid plans. Therefore, indefinite or prolonged pretirement is not wise.
Other than the above-investing partners, Waymo is building relationships with various companies.
Waymo’s car fleet includes: –
- Toyota Priuses
- Lexus SUVs
- Chrysler Pacifica Hybrid minivans
- Jaguar I-Pace
The new partnership with Jaguar Land Rover for I-Pace electric vehicles is adding up to 20,000 to Waymo’s fleet.
July 2020 saw a new exclusive global partnership deal with auto manufacturers Volvo. Waymo will work on artificial intelligence (AI), while Volvo will handle the design and manufacturing. To ensure proper safety requirements are met, each vehicle will be adapted with LiDar sensors, radar technology, and cameras.
Waymo has recently acquired the British AI company, Latent Logic, that specialize in imitation learning and use technology to simulate real human behaviors on the road. By collecting traffic data to provide real-world driving examples to algorithms, they make autonomous vehicles better at reacting to changeable situations.
The high profile partnerships will encourage investors and also boost competitive position and Waymo stock price.
The Big Tech league, including Apple and Facebook, are investing in this market, but in June, Amazon announced it was acquiring Zoox, a self-driving vehicle company, for an undisclosed amount. News reports suggested the deal was worth $1.2 billion making it one of the largest acquisitions in its history.
Tesla (TSLA), General Motors, and Baidu (BIDU) also have a strong presence in the industry.
This promising market has a lot of interest, and the ever-changing tech world will be adapting to stay ahead of the curve and win the autonomous driving race.
Having competitors in the same field, especially the high caliber ones that exist in this market, is likely to increase Waymo stock price, as opposed to hindering it.