Billionaire Investor Bill Ackman Just Went All In on This Stock. Should You Follow Suit?

Core Viewpoint - Billionaire investor Bill Ackman has taken a significant position in Uber Technologies, making it his largest holding, valued at approximately $2.2 billion, which constitutes about 18.5% of his portfolio [1][2]. Company Performance - Ackman regards Uber as "one of the best-managed and highest quality businesses in the world," highlighting its transformation into a profitable entity generating strong free cash flow [3]. - Uber's mobility and delivery segments are experiencing robust growth, with the number of trips increasing by 18% and revenue rising by 14% to $11.5 billion last quarter. Mobility revenue grew by 15% to $6.5 billion, while segment EBITDA rose by 19% to $1.8 billion. Delivery revenue increased by 18% to $3.8 billion, with segment EBITDA surging by 45% to $763 million [4]. Market Expansion and Innovations - The company is expanding into new markets, particularly those with lower population density, and plans to launch in hundreds of new cities this year. It has also benefited from moderating insurance costs and has implemented safety technology innovations [5]. Competitive Landscape - Despite strong operational performance, questions remain regarding Uber's long-term position in the market, particularly with the rise of robotaxis from competitors like Tesla and Waymo, which could potentially disrupt Uber's business model [6][12]. - Uber has a partnership with Waymo, where Uber customers can access Waymo's robotaxis in select cities, with Uber managing customer interactions and fleet management [8][9]. Investment Considerations - Ackman's purchases of Uber stock occurred in early January, and the stock has appreciated approximately 45% year-to-date. Current investors are not entering at the same price point as Ackman [11]. - The stock trades at a forward price-to-earnings ratio of 24.5 based on 2025 estimates, which is not considered a bargain but is also not excessively priced given Uber's growth potential [12]. - The future role of Uber in the ride-share and delivery markets remains uncertain, especially with the rapid growth of robotaxi services [13].