Billionaire Bill Ackman Is Loading Up on Uber Technologies Stock. Should You?

Core Viewpoint - Bill Ackman has shifted his investment focus from Alphabet to Uber Technologies, indicating a strong belief in Uber's potential for growth and profitability [1][5]. Investment Details - Pershing Square Capital Management began acquiring Uber shares in January 2025, amassing 30.3 million shares, which represents 18.5% of the hedge fund's portfolio, valued at $2.21 billion as of March 31, 2025 [3][4]. - This marks the first significant investment in Uber by Pershing Square, although Ackman had previously invested in the company through a venture fund [5][6]. Reasons for Investment - Ackman is familiar with Uber's business model and has been a long-term customer, which contributes to his confidence in the company [6]. - He believes that current CEO Dara Khosrowshahi has effectively transformed Uber into a profitable and cash-generating entity, despite past management issues [7]. - Ackman perceives Uber as undervalued, stating it can be purchased at a significant discount to its intrinsic value, although the stock has risen nearly 12% since his initial post [7][8]. Analyst Consensus - A majority of Wall Street analysts share Ackman's positive outlook on Uber, with 13 out of 54 analysts rating it as a strong buy and an average 12-month price target suggesting a 15% upside potential [8]. Growth Potential - Uber is experiencing strong revenue and earnings growth, with multiple avenues for expansion, including autonomous ride-hailing, Uber Eats, and Uber Freight [9]. Competitive Landscape - Uber faces significant competition from Lyft in the U.S., Bolt in Europe, and Didi in Latin America, which could impact its market position [10]. - The emergence of autonomous ride-hailing services presents both opportunities and threats, particularly if competitors like Tesla succeed in launching robotaxi services [10]. Valuation Concerns - Despite Ackman's belief in Uber's value, the stock trades at a forward earnings multiple of 30.6, necessitating exceptional growth for it to be considered attractively valued [11].