Alphabet's self-driving car company loses 40% of its value (but is still worth over $100B)

50% lower price than Uber, 100% less driver... That's the service Waymo wants to offer in the next few years. The self-driving car unit of Alphabet leads the race to offer up futuristic, no small talk, tip-unnecessary transport of the future. But Morgan Stanley just downgraded what the bank thinks Waymo is worth: From $175B to $105B.

Discounted cash flow modeling... Young bankers learn to wield the valuation method like it's the Patronas charm. Morgan Stanley tossed Waymo's numbers into some spreadsheets to determine how much profit Alphabet will make the next couple decades. They decided Waymo's self-driving dreams could experience less revenue and more costs than previously thought for 2 reasons:

• It's taking too long. Waymo missed targets to roll out a commercial robo-taxi service, currently still testing them out in Arizona (Waymo sticks its software into Chrysler minivans).
• Humans are expensive. Waymo will have a backup human safety driver behind the wheel for a while before it's safe enough for those minivans to cruise sans-driver.