Alphabet might be the biggest winner from the Uber IPO
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Alphabet might be the biggest winner from the Uber IPO

Ride hailing sensation Uber and Alphabet (the Silicon Valley giant that owns Google and other Big Tech properties) aren’t always the best of friends. While Alphabet isn’t in the ride-hailing business, its self-driving car program, Waymo, is a competitor with Uber on two fronts: first, Uber is also developing self-driving tech. And second, Waymo has partnered in the past with Lyft, another ride-hailing company and Uber-competitor. But, animosity aside, Alphabet may be a major beneficiary following Uber’s IPO.

Alphabet’s share price has increased by 17% so far year to date

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Source: Yahoo Finance

There was a time when Alphabet and Uber were on good terms. Alphabet was an early investor through its early-stage investment group (this hearkens back to a time when Google was the name of the whole company, not just a part of it, and the investment group was called Google Ventures). The company made its biggest-ever single investment in Uber ($258 million).

Since then things have soured. Up until 2016, Alphabet’s senior vice president of corporate development and chief legal officer David Drummond had a seat on Uber’s board. He left because of competition between the two companies in self-driving vehicles. And shortly thereafter, Alphabet sued Uber, claiming it had stolen trade secrets when it acquired a company started by a former Google employee.

You could be forgiven for forgetting about Alphabet’s investment in Uber. After all, it was way back in 2013, and while $258 million is a lot of money, it pales in comparison to most of the figures that Alphabet investors are used to reading about. Last Thursday, however, Uber’s IPO prospectus reminded the world about it. But what did we learn?

We learnt that Alphabet’s stake in Uber stands at 5.2% which, if Uber is valued at $100 billion (the figure it’s reportedly looking to go public at) is worth $5.2 billion. That’s a 20-fold multiplication from Alphabet’s initial investment! And, given its 5.3% stake in Lyft, Alphabet might just be emerging as a winner in the ride-hailing space.

Disclosure

Dominion holds Alphabet in its Global Trends Managed Fund.


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