Autonomous ride-hailing isn’t yet ready for mass consumption, but a disruptive technology once seen as far-flung is inching closer to becoming a reality, and that reality carries with it a slew of investment implications.
The ARK Autonomous Technology & Robotics ETF (CBOE: ARKQ) is one of the exchange traded funds most well-positioned to capitalize on the emergence of autonomous ride-hailing, which isn’t surprising when considering ARK Investment Management has been a leader in bringing the autonomous ride-hailing idea to investors of all stripes.
ARK analyst Tasha Keeney continues that tradition, noting in a recent “Work in Progress” piece on Medium that the autonomous ride-hailing market is potentially far more lucrative than originally expected.
“ARK previously estimated that autonomous ride-hail could expand the ride-hailing market from $150 billion today to $6–7 trillion by 2030. Based on our most recent research on consumers’ perceived value of time, we now estimate the total addressable opportunity to be $11–12 trillion,” she writes.
ARKQ Ready for Ride-Hailing Prime Time
Perhaps the most obvious benefit of ARKQ as an avenue to autonomous ride-hailing investing is that the ARK exchange traded fund is actively managed, meaning it can nimbly position itself within the realm of this emerging technology. Due to this form of ride-hailing still being in its nascent stages, many rival passive funds aren’t adequately exposed to this trend.
Economics confirm there’s ample motivation for the Lyfts and Ubers of the world to pursue and execute on the autonomous concept.
“ARK estimates that autonomous driving could reduce the cost of ride-hail significantly, expanding the addressable market,” adds Keeney. “Today, the average price of an Uber is $2 per mile, while Didi is $0.50-$.70 per mile. We estimate that autonomous ride-hail vehicles will have higher utilization rates than human-driven cars, as well as lower labor and insurance costs.”
Lower prices could mean more demand, making the aforementioned $11 trillion to $12 trillion not so far-flung. Importantly, the broader investment thesis revolves around, you guessed it, technology. For example, if Uber’s autonomous tech isn’t up to par, it may have to go to a third-party vendor, and some of those companies could eventually dwell in ARKQ.
“Without a successful autonomous platform, today’s ride-hail players may be forced to partner with outside technology providers and cede a substantial portion of the fees they collect off rides in the process. Autonomous technology companies will both expand the addressable market and snag the lion’s share of the economics,” concludes Keeney.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.