Shares of Uber Technologies (NYSE:UBER) fell 9.6% in today’s trading.
At first, it may seem strange that Uber is declining, as the company hasn’t made any major announcements today. However, a possible future competitor did, with major potential long-term consequences.
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On Thursday, the majority-owned autonomous taxi company Waymo announced Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) announced it would expand to Miami in 2025, with the goal of offering autonomous rides by 2026.
Waymo was founded in 2009 as one of Alphabet’s “Other Bets” or “moonshot” projects that could one day grow into a major company. Waymo was subsequently spun off into a separate subsidiary in 2016 and has raised external funding to help Alphabet commercialize its technology. Waymo raised another $5.6 billion from a group of major venture capital firms in late 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. Therefore, Waymo could potentially become a major competitor to Uber, which dominates the ride-hailing industry today.
However, the two companies have also collaborated in the recent past. In September, Uber and Waymo announced that they would jointly bring autonomous rides to Austin and Atlanta via the Uber app. As part of that partnership, Uber will offer fleet management services.
However, Waymo found another partner, Moove, for fleet management in Miami. So perhaps Uber’s exclusion from the Miami announcement today led to such a big sell-off.
Investors might have thought Uber would partner Waymo in every additional city Waymo enters. However, it looks like Uber isn’t the only game in town when it comes to fleet management.
If Uber can leverage its dominant network effects in the age of autonomy, this sell-off could be a buying opportunity. However, there is also a chance that Uber will be disrupted by autonomy. In that case, all bets are off.
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