Waymo self-driving cars make illegal U-turns, zigzag through tunnels

Waymo has reprogrammed its autonomous vehicles to be more “confidently assertive,” prompting reports of illegal maneuvers (including a cited September illegal U‑turn) and closer passing behavior in San Francisco as the company seeks to operate effectively in dense city traffic. The firm says its driver has logged 100 million driverless miles with 91% fewer crashes causing serious injury versus humans, but faces growing federal scrutiny — multiple NHTSA probes (including reports of driving around stopped school buses and a closed probe tied to two software recalls), several technical-related recalls, and documented real-world incidents — even as it expands paid passenger service in multiple metro areas and prepares broader rollouts in 2026.

Analysis

Contrarian angles: Consensus underweights Alphabet’s cash flow and multi-product hedges — a knee-jerk 10–20% sell-off could be overdone if probes remain preliminary; selective long-dated calls (12–18 months) offer cheap asymmetry. Historical parallels: early autonomous recalls (airbags, OTA software) caused short-term drawdowns but not permanent market displacement; conversely, unintended consequence — more aggressive behavior could improve throughput and unit economics, making Waymo more viable medium-term. Don’t scale shorts >3% of book without a regulatory trigger; prefer option structures to cash shorts.

Key Decisions for Investors

• Establish a 2% portfolio-sized protective hedge on GOOGL via a 3-month put spread: buy a 7.5% OTM put and sell a 15% OTM put (equal notionals) to cap cost; unwind if GOOGL falls >10% or after NHTSA issue resolution within 60 days.
• Initiate a 2–3% long position in UBER equity with a 6–12 month horizon to capture temporary demand reallocation from AV hesitation; trim if quarterly rides growth falls >200bp below consensus or if stock rallies >30% from entry.
• If GOOGL 30-day implied volatility spikes >20% above realized, deploy short-dated (45–90 day) iron-condors or sell vertical credit spreads to monetize elevated premium, size to 1–2% of portfolio and close before regulatory milestones (NHTSA updates) within 30–90 days.