While investing money in technology development for self-driving vehicles, Google parent company Alphabet is making loads of money from in the transportation industry currently.
After the US ride hailing company Lyft went public at the stock exchange on Friday, the value of its investment in the company has been doubled by CapitalG, which is the late-stage investing arm of Alphabet.
According to reports, $500 million was invested by CapitalG in Lyft in October 2017 at $39.75 a share. That stake has not more than doubled at over $1 billion after the share price of Lyft increased by 11 per cent to more than $80 a share.
There is a complicated but lucrative relationship between Alphabet and Lyft because the tech giant also has investments in Lyft rival Uber. The early-stage venture arm of Alphabet, GV, formerly known as Google Ventures, had made investment of more than $250 million in Uber in 2013 and seta on the board of the ride haling giant was taken up by Google executive David Drummond.
Since then however, Alphabet and Uber has been gradually competing in with each other in a number of area including in the self-driving technology segment. That resulted in Drummond leaving the Uber board in 2016. Uber was then sued by Alphabet in 2017 claiming the that the ride hailing firm had allegedly stolen trade secrets from Alphabet when Uber had acquired a self-driving technology start-up which was founded by a former executive of Google, Anthony Levandowski. In February, the two parties settled the case with Uber agreeing to award Waymo a 0.34 per cent equity stake which at that point in time was valued at about $245 million.
Even while the law suit with Uber was going on, Alphabet took up its stake in Lyft. That investment now has made Alphabets the fifth largest outside investor in Lyft after Japan’s Rakuten, GM, Fidelity and venture firm Andreessen Horowitz.
Alphabet announced last year of the company making profits of about $3 billion from the investments that it had made in equity investments – the majority of which came from the 2013 investment made by it in Uber. And co0nsidering that the current value of Uber is the same as it was when Alphabet had made the investment, the total combined stake of Alphabet in Uber and Lyft is worth over $4 billion.
The actual position of investment of Alphabet in Uber would soon be known to investors as the largest rival of Lyft is set to launch its IPO very soon and people would be able to get all the relevant data from its IPO prospectus.
Alphabet is also a potential competitor and technology supplier in addition to holding big equity stakes in the market.
This became evident when Lyft filed its prospectus for IPO and the risk factors section of the document named Alphabet’s Waymo to be atg the top of among the five names that Lyft listed as “companies developing autonomous vehicle technology that may compete with us in the future.”
(Adapted from CNBC.com)