Comment by kolbe
Alphabet is providing $13bn of the $16bn raise. What are you talking about? Do you really think that $3bn matters in the slightest?
Alphabet is providing $13bn of the $16bn raise. What are you talking about? Do you really think that $3bn matters in the slightest?
Yes and what matters the most is what Waymo has been signaling for years. They don’t want the capex (owning and running the physical cars). I don’t know the intent of this raise but you have to realize companies may have a good asset but they don’t want to own it 100% for a multitude of reasons. Some of them could be as simple as wanting to get other investors involved and comfortable with the asset to maybe take on larger roles in future rounds. Or in this case potentially running the car part of the business.
By investing $13B of the $16B they're signalling they do want the capex, at least for now.
If they truly wanted the capex, this would not be a mixed round A fully internal recap would have been simpler. The presence of outside capital, even minority, is consistent with a gradual transition toward shared ownership, asset light structures, or operator partners.
They have made many comments over the years about this too.
Notice I left a list of potential reasons. Not that ownership has changed. Just pointing out for folks like yourself that Google has made commentary about this exploring the idea of partnering with companies that operate the physical fleet. $3bn even if chump change for you is still a larger placement and has some level of signaling indicating the want to get other folks involved at some level.
This is why you are not the finance guy.
My finance people care about the cents, a ROI of 7% is average but at 8.5% and now you are a world class asset of that inventory type. That’s sometimes the difference of a few hundred k out of 20m but they would not take the deal if it is slightly over due to their risk appetite.
The 3b external either matters a ton to fit their risk models OR they are doing a favor to an outside party. Probably a bit of both.
Well, given that it is an equity sale, split still feels like it is the prorated amount so that alphabet continues to own its percentage - not more not less.
Obviously you're entitled to your view, but I don't think it's that kind of finance model right now - it's far too speculative and the upside too unknown to be adjusting for small amounts on risk models.
three billion here, three billion there, pretty soon it begins to add up to real money
What I'm talking about is that is still considered an external capital raise for the purpose of the markets and where those assets sit on the balance sheet.
Also, keep in mind the Alphabet doesn't fully own Waymo. I don't know the percentage ownership of hand, but that also feels like it's probably a prorated investment based on ownership so Alphabet doesn't reduce its voting control.
That's what I'm talking about.