Hedge fund manager Bill Ackman is known for making big, calculated moves in the stock market. His latest? A massive stake in Uber Technologies. And unlike other money managers who keep their trades under wraps until regulatory filings force their hand, Ackman went straight to social media to break the news.
His hedge fund, Pershing Square Capital Management, started scooping up Uber shares in early January, and by now, it holds a staggering 30.3 million shares. That’s a serious bet on a company that’s been through its fair share of ups and downs. But what’s behind this move? And more importantly, should investors be paying attention?
Why Uber? Ackman’s Investment Strategy Explained
Ackman has a reputation for spotting value where others don’t. He doesn’t just buy stocks—he builds conviction in them. His fund typically holds only about 10 stocks at a time, meaning every pick is carefully chosen.
For Uber, the bet is simple: Ackman sees a company trading at a massive discount to what it’s truly worth. Despite its growth, the stock hasn’t reflected its full potential, and Ackman believes that’s an opportunity too good to ignore.
His history with Uber also plays a role. Years ago, Pershing Square invested in the company during its private funding rounds. Now that Uber is public, Ackman is doubling down, signaling confidence that the company is heading in the right direction.
Uber’s Valuation: Is It Really a Bargain?
At first glance, Uber’s current stock price—hovering around $75—might not scream “discount.” But price alone doesn’t tell the full story.
- Market Cap: $167 billion
- 52-Week Range: $54.84 – $87.00
- Gross Margin: 31.57%
One of the most compelling factors is Uber’s free cash flow (FCF). Over the last three years, the company has transformed from a money-burning operation to a cash-generating machine. Yet, oddly enough, its valuation multiples have compressed.
That means while Uber has become more profitable, its stock has actually gotten cheaper in relative terms. Normally, when a company turns profitable, investors bid up its shares. So why isn’t that happening here?
The Uncertainty Factor: Self-Driving Cars and the Road Ahead
One of the biggest unknowns surrounding Uber is the future of autonomous vehicles. The ride-hailing giant depends on human drivers today, but what happens when self-driving technology reaches mass adoption?
Some see this as a threat—companies like Alphabet (through Waymo) and Tesla (via Robotaxi) are actively developing self-driving fleets that could compete with Uber. If these projects take off, Uber’s entire business model could be at risk.
But there’s another way to look at it. What if Uber partners with self-driving companies instead of competing with them? After all, Uber already operates a massive ride-hailing network. If Waymo or Tesla want to deploy autonomous taxis at scale, they might need Uber’s platform to do it.
Uber’s Global Reach Is a Key Advantage
While self-driving cars dominate the headlines, it’s easy to forget that Uber isn’t just a U.S. business.
- Operations in over 70 countries
- Expanding beyond rides into food delivery, freight, and advertising
- Massive untapped potential in regions where car ownership is low
Autonomous driving might be a game-changer someday, but full adoption is still years—maybe even decades—away in many parts of the world. In the meantime, Uber is rapidly building out its services in emerging markets, diversifying its revenue streams, and pushing toward consistent profitability.
Following Ackman’s Lead: A Smart Move for Investors?
Ackman’s track record speaks for itself. He has a knack for identifying undervalued companies and riding them to massive gains.
His decision to invest in Uber isn’t just a trade—it’s a bet on the company’s ability to outgrow short-term concerns and dominate the transportation industry for years to come.
For retail investors, this might be a rare chance to buy into a top-tier stock before Wall Street fully catches on. If Uber’s valuation multiples eventually expand to reflect its earnings power, today’s price could look like a bargain in hindsight.
One thing is clear: When a hedge fund heavyweight like Ackman goes all-in, it’s worth paying attention.
