One of the most respected tech-oriented funds recently channeled billions into the driverless-car unit of General Motors (NYSE:GM). It is a matter that has significantly impacted the way Wall Street looks at the automaker.
The shares of the company scaled higher in the course of this week, a matter that has been attributed to the move by the SoftBank Group Corps’ tech-oriented Vision fund to channel about $2.25 billion in form of an investment in Cruise, which happens to be the company’s autonomous-vehicle unit.
This investment has validated the autonomous technology of GM as well as pinned down the valuation of Cruise. Currently, SoftBank happens to be one of the largest and arguably most savvy technology investor around the globe. The focus will be on ensuring that GM defrays the cost of coming up with autonomous technology on its own and as a result increasing the cash flow and earnings.
Predictions into the future
For over quite some time JPMorgan Chase & Co (NYSE:JPM) has been of the opinion that the shares of GM deserved to trade at higher levels. It was a good thing that most of the investors reserved fears regarding what could eventually happen in the next downturn not forgetting the fear of disintermediation by Silicon Valley.
Concerns regarding the costs that would pull along with the development of driverless cars have been faced out and most of the investors have started looking at Cruise as a long-term investment. Earlier on, they saw it as an elevated cost allocation in line with unproven entity whose value remained uncertain.
So far, GM sticks out as the leader in the in the autonomous industry. The company has outlined that it will be unveiling a no steering-wheel, no-pedal driverless car in the coming year.
One official opined, “We believe this will provide GM with a significant first-mover advantage as the timeline implies a rollout well ahead of peers, which include both traditional automotive players as well as potential established and startup Silicon Valley disrupters.”
There are a lot of positive things happening lately. If all moves according to plan, the stock might double in a matter of two years. GM is also pleased about the settlement of the case that has been pending in court for over quite some time. The company’s self-driving car hit a motorcyclist.