Actions Uber Technologies (NYSE: UBER) fell by 9.6% in today’s trading.
At first, it might seem surprising that Uber is going down, as the company hasn’t made any major announcements today. However, a possible future competitor did, with great potential for long-term consequences.
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Autonomous company Waymo, which owns a majority of the shares, on Thursday Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL ) announced an expansion to Miami in 2025 with the goal of offering autonomous travel by 2026.
Waymo was founded in 2009 as one of Alphabet’s “Other Bets” or “moonshot” projects that could one day become a big business. In 2016, Waymo was spun off as a separate subsidiary and raised outside funds to help Alphabet bring its technology to market. In fact, Waymo just raised another $5.6 billion from a group of big companies venture capital firm at the end of October. Deepwater Asset Management recently estimated that Alphabet still owns about 70% of the company today.
With its own ride-hailing app, Waymo already provides autonomous rides in San Francisco, Los Angeles and Phoenix. As such, Waymo could potentially become a big competitor to Uber, which dominates ride-hailing today.
However, the two companies have also collaborated in the recent past. In September, Uber and Waymo announced that they are sharing autonomous rides in Austin and Atlanta through the Uber app. As part of this partnership, Uber will provide fleet management services.
However, Waymo has identified another partner, Moove, to manage the Miami fleet. So maybe Uber’s failure to announce in Miami led to such a big selloff today.
Investors might have thought that Uber would partner with Waymo in each additional city that Waymo entered. However, it appears Uber isn’t the only game in town for fleet management.
If Uber can leverage its dominant network effects of ride-hailing the age of autonomythis sale could be a buying opportunity. However, there is also the possibility that Uber could be compromised by autonomy. In this case, all bets are off.
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