The Long Game Behind Waymo’s Potential $100 Billion Valuation
The Takeaway
- Waymo is in talks to raise new funding at a $100 billion valuation
- That valuation would amount to 280 times its recent annualized revenue
- The ride-hailing company could live up to that valuation if it increases revenue at the rate some analysts expect
Can Waymo justify a $100 billion valuation? That’s a question investors will answer as Alphabet’s autonomous ride-hailing company discusses raising funding at a valuation that amounts to 280 times its annualized revenue—many times higher than other ride-hailing companies.
Waymo’s rapid expansion in recent months—despite some hiccups such as a service suspension during a San Francisco blackout—suggests it can grow into that valuation. Revenue should rise as it adds riders and new services in cities, either by taking market share from Uber and Lyft or by unlocking entirely new demand.
So far this year, the Google-controlled company has completed over 14 million paid trips without a driver behind the wheel, three times more than in 2024. Annualized revenue from offering paid rides in five cities has topped $350 million. The company plans to make its robotaxi service available to the public in at least five more cities in 2026. By 2030, annualized revenue could hit at least $2.5 billion, according to Morgan Stanley analysts’ most recent projection, made in January.
It’s possible it will grow even faster than that, says Evan Schlossman, an investor at venture firm SuRo Capital, who has been tracking the company.
“Waymo is an interesting example of a company with both hardware and software where you can see a large revenue base growing quickly without requiring extraordinary assumptions,” Schlossman said. It’s not unreasonable, he said, to believe Waymo could expand into roughly five times as many geographies as today.
At $2.5 billion in annualized sales, the business’ expected valuation would drop to 40 times revenue. Still, Uber and Lyft, in contrast, have revenue multiples of less than three times. While they’re likely both growing significantly more slowly than Waymo, they are both projected to report revenue growth in the mid teens for 2025—and both are profitable.
It’s still not clear to what extent the availability of robotaxis could eat into demand for traditional ride-hailing services. In a note this month, Morgan Stanley analysts predicted that Uber would generate a compound annual growth rate of 14% over the next seven years, if robotaxi demand is entirely additive to existing demand for ride-hailing services with human drivers.
If robotaxi rides instead replace some trips that would otherwise use human drivers, Uber’s growth rate would fall to the single digits over those years, the analysts project.
One point in Waymo’s favor is that it will likely draw revenue from sources beyond ride-hailing. Waymo co-CEO Tekedra Mawakana has said the company plans to expand beyond its robotaxi service to local delivery and long-haul trucking, and eventually licensing its autonomous-driving technology to automotive makers.
Its partnership with DoorDash to offer autonomous food delivery in Phoenix, announced in October, may be a preview of what comes next. At Uber, food delivery makes up one-third of revenue and is growing faster than ride-hailing. It also accounts for about 40% of Uber’s operating earnings, excluding stock compensation, depreciation and amortization.
For Waymo, licensing its software to automakers is likely further off. But those fees could eventually boost margins because the overhead cost to maintain and improve the software likely won’t be as onerous as the cost of putting more robotaxis on the road.
Fortunately for Waymo, if it proceeds with the fundraise, there’s some precedent for cash-burning ride-hailing startups eventually growing into their valuations.
In December 2014, then-private Uber raised money at a $40 billion valuation. That was double the valuation the startup secured in a previous round announced that June, and it was the highest for any venture-backed startup at the time—raising eyebrows among investors and analysts. Uber, then five years old, was generating only hundreds of millions of dollars in revenue at the time, though the specific amount wasn’t publicly known then.
Concerns about Uber’s valuation turned out to be overblown. The company generated about $1.5 billion in net revenue in 2015, roughly three times as much as in 2014. That suggests its backers ultimately invested at a multiple of about 27 times forward sales.
Tesla’s Advantage
Although Waymo doesn’t need to pay human drivers to run its service, there are big questions lingering around other long-term costs. The cost of insurance for autonomous vehicles is one key area of uncertainty. Another concern is that the detection sensors and accompanying hardware installed on Waymo’s vehicles are expensive.
When it comes to those hardware costs, Waymo is at a disadvantage compared with Tesla. Tesla’s autonomous vehicles use less-expensive cameras to map roadways. For now, they are available to ride-hailing passengers in only a few cities, with a human driver behind the wheel for supervision. In their report this month, Morgan Stanley analysts estimate that Waymo’s cost per mile is around $1.43 currently, while Tesla’s is $0.81.
It remains to be seen whether that difference will translate to an enduring advantage for Tesla. The Morgan Stanley analysts say newer Waymo vehicles that the company plans to deploy in 2026 will likely cost less to operate, at about 99 cents to $1.08 per mile. That’s partly because Waymo is testing less-expensive base vehicles—cars before AV tech is incorporated—from Hyundai and Chinese firm Zeekr rather than the premium Jaguar I-Pace models currently used for most public Waymo rides. Insurance costs could also fall if robotaxi safety records continue to improve.
Costs aside, Waymo has a leg up over its robotaxi rivals when it comes to regulatory approval. Tesla, like Amazon’s robotaxi unit Zoox, is still awaiting clearance to charge riders for paid rides in cities where it operates. Longtime Tesla bull and venture capitalist Chamath Palihapitiya, for one, noted in a post on X that “it will be incumbent on Tesla to show their error tolerances are as good or better than Waymo.” He suggested Tesla would need that kind of performance to convince regulators to let it operate more broadly.
Even if Tesla or Zoox secures the right permits, however, Waymo has already built a solid lead by being first in several major cities. If it continues to focus aggressively on expansion and market share like Uber did in its early years of growth, its moat could prove even wider than that of Uber, whose market capitalization is over 20 times larger than its rival Lyft’s.
Uber was worth $82 billion when it went public in 2019, not far off from its highest private valuation. It’s now profitable, more diversified and worth about twice as much. Waymo’s investors seem poised to make a similar bet.
