Will Google Combat Uber & Lyft for Ride Sharing Dominance?

As per a report published in The Wall Street Journal, it is being rumored that Alphabet Inc. GOOGL owned Google is on track to launch its car pooling service in San Francisco in fall this year.

In 2013, Google acquired Waze, a crowdsourced app for mapping and navigation. The app’s ride sharing facility will now be made available to commuters in San Francisco. The service will enable the driver of a vehicle to pick up passengers who are headed in the same direction or destination for a certain fare.

After the service was piloted in May, only 25,000 employees belonging to a select group of companies had access to the app. Come fall 2016, all Waze users from the San Francisco area can avail the service.

We note that Waze has been offering similar services in Israel, its home market since last year.

Unlike Uber and Lyft Inc., whose business models are based on on-demand taxi, Waze aims at connecting riders with drivers who are going in the same direction. Additionally, the company is intent on keeping fares low to discourage drivers who would have otherwise operated as taxi drivers. We note that Waze currently charges 54 cents per mile, which is a tad lower than what Uber and Lyft cost.

With Google taking interest in the transportation segment, this launch was expected to happen sooner or later. However, the company needs to overcome certain legal and safety issues for the smooth running of the business.

At present, Alphabet has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology space are Facebook, Inc. FB, LinkedIn Corporation LNKD and Yirendai Ltd.YRD, each sporting a Zacks Rank #1 (Strong Buy).

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