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Cruise has lost more than $8 billion since 2017, including $728 million in the third quarter of 2023, according to GM financial records. Cruise closed the third quarter with $1.7 billion in cash, which should give it nine months of runway. The employee share program involves GM buying back vested equity on a quarterly basis to facilitate recurring liquidity. The shares were historically bought based on valuation, but Cruise’s valuation has changed since an October 2 incident that left a pedestrian stuck under and dragged by a Cruise robotaxi.
Cruise’s Valuation Reportedly Cut By More Than 50% - CleanTechnica
Cruise’s Valuation Reportedly Cut By More Than 50%.
Posted: Mon, 04 Mar 2024 08:00:00 GMT [source]
Autonomous Ride Services
If the current momentum continues, it will be a matter of months before it can begin charging for rides with no driver in the car. According to Vogt, the company is in the process of smoothing out technological "rough spots." For the first time in eight years, he said, technology isn't the bottleneck in the way of commercialization. The new bottleneck, he implies, is Cruise's unproven ability to scale operations in other cities and to expand the number of vehicles it dedicates to ride-hailing - with the goal of profitability. To reach $1 billion in revenues, Cruise's fleet would need to generate at least $2.74 million per day, on average; obviously ride-hail revenues fluctuate depending on the day/season, but the figure can provide an estimation on fleet size and trips taken. With its permit, Cruise may operate vehicles on public roads in San Francisco between 10 p.m.
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Next on the list is launching the Cruise Origin (shown above), a specially designed vehicle for the autonomous ride-sharing market. There's no driver, and passengers will face each other, maximizing rider space in the vehicle. The launch of this vehicle will take billions of dollars and be high-risk, which is what SoftBank's $1.35 billion investment would have been used for. Now, GM is responsible for the investment and will take even more control over Cruise.
Cruise IPO: How to buy this autonomous car maker's stock? - Kalkine Media
Data from the SFCTA place the average ride-hail trip distance at 2.6 miles for intra-SF rides, with an average time of ~11 minutes. Given Cruise's pricing structure, an average paid trip in a Cruise autonomous vehicle would be approximately $11.92. A longer trip, such as a 5.2 mile, 18 minute trip, could cost about $17.13. Cruise is building the world’s most advanced self-driving vehicles to safely connect people with the places, things, and experiences they care about.
Service Area Expansion In San Francisco
Its latest investment of $2.75 billion came January-April 2021 from Microsoft, institutional investors, and $750 million from Walmart at the tail end of the round. Walmart’s investment followed five months of a pilot program in Scottsdale. The estimated valuation of Cruise was approximately $30 billion following these investments. On Monday, Cruise said it planned to begin deploying a limited number of its Origin vehicles for ride-hail services in Dubai from 2023, its first overseas commercial service. On the date of publication, Sakshi Agarwalla did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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Cruise is looking to use a cookie-cutter model in which it can successfully replicate deployments across other cities in less than 90 days. Barra’s technology investments have been pushing up GM shares this year. Activist investor Engine No. 1, which has said it invests in companies that have a positive impact on workers, communities and the environment, disclosed Monday that its stake in GM is passive. Its technology includes camera-based driver monitoring that works both day and night to alert the driver. Nauto develops artificial intelligence (AI) enabled driver behavior modification technology.
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Cruise intends to transition away from a traditional passenger vehicle such as the Bolt to GM's purpose-built people mover, the Origin - an odd-looking conveyance that lacks steering wheel and other traditional control devices. This is a clear leader in autonomous driving with a lot of growth potential. Ammann was president of GM and went to Cruise to prepare self-driving technology for commercialization. Since then, he has been expanding the company by hiring more technology experts.
We already discussed that it is currently trading at a traditional car manufacturer's P/E ratio, so the $20 billion value of Cruise should be added to its market cap. This would give it a market cap of $100 billion, or a 25% higher stock price of more than $86 per share. Since these sophisticated investors only make investments they think will be worth a lot more, then the value of cruise is most likely much higher. With the economy normalizing and a pent-up demand for travel, the company plans to expand its cruise line business by adding three more ships this year. Disney has a track record of delivering solid growth in revenues and profits. The company’s Disney+ and other streaming services have gained significant consumer traction in the past couple of years.
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And like Waymo, it is also testing in the Phoenix metropolitan area with 12 AVs using employee riders and in-vehicle safety drivers. It's clear now that GM is extremely bullish on Cruise's future, despite the fact that the company will likely need billions of dollars to get its service to a sustainable point financially. GM has already given Cruise a $5 billion line of credit to assist in deploying autonomous ride-sharing vehicles.
GM is seeking clearance from federal safety regulators for self-driving cars that do not have conventional controls, such as a steering wheel. It already has a permit from California to remove backup drivers from its autonomous vehicles, and it is building a large vehicle charging station in San Francisco's Dogpatch neighborhood. GM originally acquired Cruise Automation for more than $1 billion in May 2016. Since then, GM has organized its autonomous vehicle efforts, mainly its autonomous ride services (ARS), around Cruise. During the first quarter business update, management disclosed that RCL’s advanced booking volumes have surpassed the record levels achieved in 2019 by 40%, lending optimism to future growth prospects. As RCL commences full-fleet operations during the year, management hopes to return to full profitability by the second half of 2022.
Even if Cruise is only valued at $30 billion by these sophisticated outside investors, it is still a unique investment opportunity. By investing in GM, you are essentially investing at the same price that they did, or potentially less if you consider that GM is undervalued. This is truly a unique opportunity for general investors to participate in an early investment opportunity alongside big sophisticated investors by investing directly in GM. We will consider the case for each of these as well as the potential impact each has on GM's overall valuation, but first, let's look a little more at autonomous ride services and then Cruise. The comments, opinions, and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. Though we believe the information provided herein is reliable, we do not warrant its accuracy or completeness.
Earlier this month, according to audio leaked to Forbes from an all-hands meeting, CEO Kyle Vogt confirmed that staff layoffs were coming. As part of their total compensation, Cruise employees would receive some cash salary and also would receive another portion as company stock. What would be the valuation of a technology-based company with $30 billion in revenue in a profitable and rapidly growing market? Easily it could be valued at more than $100 billion with an expected value by 2030 of more than $500 billion. In fact, a 10X multiple of revenue would not be out of the question, and this would be $300 billion. These sophisticated investors put a lot of money into Cruise, and you can assume that they were careful in the valuation of these investments.
Cruise COO Gil West told Reuters the AV developer is aiming to enter a "large number of markets" and deploy up to "thousands of vehicles" in 2023. This would mark a pretty rapid expansion of commercial services and fleet size, not just for Cruise but for the broader AV industry. Cruise believes this expansion can be done with the launch of the Origin, a purpose-built AV with no steering wheel or pedals, tailored for autonomous ride-hailing. The California DMV has approved Cruise to test the Origin in San Francisco, so commercial deployment and charging for rides to the public still is multiple months away. UISEE Technology specializes in artificial intelligence and autonomous driving within the transportation and logistics sectors. The company offers a range of autonomous vehicles including unmanned logistics vehicles, autonomous buses, and light trucks, as well as AI-driven services for passenger cars such as RoboTaxi and U-Pilot.
At a top speed limit of 30 miles per hour and can drive in light rain and light fog. Cruise received permission to test autonomous vehicles on public roads with a safety driver in 2015 and without a driver in October 2020. GM’s presentation will include updates on the automaker’s electric vehicle plans, its SuperCruise driver-assistance feature and how the company will use its Ultify software platform to generate more revenue from app-based services in cars.
The ARS market will be a regional market with services launched in various metropolitan areas, so it's unlikely to be a market one company could dominate. The real question may be the degree of success Cruise has relative to other competitors. While that remains to be seen, it doesn't mean that Cruise is worthless. EquityZen helps investors to access private companies and their employees to sell shares. The announcement comes a week after peer TuSimple revealed plans for an initial public offering (IPO), at a time when self-drive technology is yet to be commercialised.
There were rumors that it was in early discussions with investment banks about strategic options, including a public offering, listing a separate tracking stock to reflect its value, or spinning off the business to shareholders. Charging for self-driving vehicle services would be a significant step for Cruise and other companies that have spent billions trying to get their technology ready and regulatory permission to run cars without a human safety driver. Technological progress and establishing approvals for robotic driving have taken longer than anticipated, making revenue elusive for startups. Cruise had to back off plans to deploy robotaxis in 2019 because it needed more time for performance and safety checks. Most likely, the stock market is not yet valuing GM's Cruise, and this provides a unique investment opportunity. Most likely this will happen in the next two years when Cruise demonstrates that it has a functioning autonomous ride service business with a viable business model.
