Google’s parent company Alphabet is sitting on a potentially huge self-driving car business, Morgan Stanley analysts Brian Nowak and Adam Jonas wrote in a research note Tuesday.
Nowak and Jonas peg Waymo, Alphabet’s self-driving car division, as a potential spin-out company worth at least $US70 billion.
They say the recent self-driving partnership with Lyft will help the company reach more miles driven. There’s also a regulatory risk with self-driving cars that Alphabet may not want to deal with as driverless cars become mainstream, they say. That could be one reason Alphabet would spin the company out.
The note also raises an overall question about Alphabet’s “Other Bets,” the group of companies outside of the core Google business such as Nest, Verily, and Fibre. What happens when one of those Other Bets grows large enough that its able to sustain itself? Does Alphabet spin it out? Will the financials be reported separately? The two Morgan Stanley analysts see Waymo as the first Alphabet company for which this is a viable option.
It’s only been about two years since Google reorganized into Alphabet, so these are all still open questions.
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