Cruise Automation is a self-driving car startup acquired by General Motors in 2016. With continuous investments from giants like SoftBank and Honda, Cruise has grown into a leading player in autonomous driving technology. As an individual investor, there are limited options to invest in private companies like Cruise. However, with Cruise potentially going public in the future, retail investors may have opportunities to benefit from its growth. This article explores methods and prospects of investing in Cruise Automation.
Cruise’s latest valuation reached $30 billion with SoftBank’s investment
In May 2018, SoftBank’s Vision Fund invested $2.25 billion in Cruise Automation, valuing the company at $11.5 billion. Together with additional investments in 2019 which raised another $1.15 billion, Cruise’s valuation has reached over $30 billion, making it one of the highest valued autonomous driving startups globally. Such a high valuation signals strong confidence in Cruise’s technology and growth prospects.
Investment banks predict Cruise’s IPO could further boost its value
In 2019, Morgan Stanley made a bold prediction that Cruise could be worth $175 billion if it goes public in 2030. Considering that GM paid less than $1 billion to acquire Cruise in 2016, this represents over 100 times return in 15 years. While the $175 billion number is speculative, it’s clear that Cruise holds tremendous potential. Its unique position within GM also makes it attractive to public market investors.
Waiting for Cruise’s IPO provides the easiest access for retail investors
Since Cruise Automation was acquired by GM, direct investment is no longer possible for most individual investors. However, Cruise has stated intentions to pursue an IPO once its technology matures, which could happen between 2025-2030. Going public would allow Cruise to raise additional growth capital while providing liquidity options for early investors. This presents the easiest way for retail investors to gain exposure to Cruise’s upside.
Indirect investment via GM stock also provides exposure to Cruise
Considering GM is still the majority shareholder of Cruise, its stock price reflects Cruise’s valuation and growth prospects to a certain extent. While GM’s core business faces various challenges, its stake in Cruise makes it an appealing investment for those bullish on autonomous driving. If Cruise ends up being very successful, it can greatly lift GM’s valuation and boost its stock price.
For individual investors optimistic about the autonomous driving industry, Cruise Automation represents an attractive long-term opportunity. Waiting for its eventual IPO or investing in GM stock now both allow exposure to Cruise’s potential upside. As technologies and regulations progress, the next 5-10 years will prove critical in realizing the self-driving future.