Bill Ackman's Uber Bet: A Path to More Than Double in Four Years

Bill Ackman, the billionaire investor and CEO of Pershing Square Capital Management, has made a name for himself with his concentrated portfolio and activist stances. Recently, Ackman revealed that one of his largest positions, Uber Technologies Inc. (UBER), has the potential to more than double within the next four years. Let's take a closer look at the factors driving Ackman's bullish outlook and the opportunities that lie ahead for Uber.



Ackman's investment thesis for Uber is centered around the company's massive platform and network, which reinforces a strong supply and demand effect. The Pershing Square team also highlighted the industry-leading management team led by CEO Dara Khosrowshahi and the likelihood of robust margin expansion, strong earnings growth, and the return of capital to shareholders. Management's internal targets suggest at least 30% annualized earnings growth over the next several years, thanks to mid-to-high-teens top-line growth and share repurchases.

Moreover, Uber's significant amount of fixed costs positions the company for operating leverage in the future. The company has only grown total employees by 3% since 2019 while increasing total bookings by 20%. This operating leverage, combined with Uber's strong earnings growth and margin expansion, sets the stage for a significant increase in the company's stock price.



Autonomous vehicles (AVs) also play a role in Ackman's bullish outlook for Uber. While some investors may be concerned about the potential impact of AVs on Uber's business model, Ackman believes that the company's massive customer base and deep experience in managing large ride fleets from an operational and regulatory standpoint position it as a critical resource for the ultimate commercialization of AVs. Uber's strategic partnerships with AV companies like Waymo and WeRide further validate this position and provide additional growth opportunities for the company.

Uber's valuation appears to be attractive compared to its peers in the ride-sharing and delivery sectors. As of the time of Ackman's announcement, Uber shares traded for an enterprise value of 0.9 times its 2024 gross bookings, which is a relatively low multiple considering the company's growth prospects. Additionally, the enterprise value-to-EBITDA multiple is less than 18 times analysts' 2025 expectations, indicating that the stock may be undervalued.

In conclusion, Bill Ackman's bullish outlook for Uber is supported by the company's strong earnings growth and margin expansion, operating leverage, strategic positioning in the AV market, and attractive valuation. As Uber continues to execute on its growth strategy and capitalize on its competitive advantages, investors can expect the company's stock price to more than double within the next four years.