Bill Ackman's Bold Bet: Why Uber Is His Top Holding

Globe and Mail

2 days ago

When a high-profile investor like Bill Ackman makes a bold portfolio move, it's worth paying attention. And in 2025, Ackman did exactly that: Earlier this year, he revealed a massive stake in Uber Technologies (NYSE: UBER), a move that made the rideshare platform his largest holding.
Uber has long been a controversial stock, burning cash in its early years, dogged by regulatory battles, and constantly trying to prove its business model was sustainable. But that narrative is quickly changing. With strong free cash flow, a growing delivery business, and upside from autonomous vehicle partnerships, Uber looks like a very different company today.
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Ackman's conviction is clear. As of this spring, Uber accounted for nearly 19% of Pershing Square's equity portfolio. And based on how the business is performing, he may be right to go big.
A transformed cash cow
Uber's first-quarter 2025 results showed the company firing on all cylinders. Revenue rose 14% year over year to $11.5 billion, and adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) climbed 35% to $1.9 billion. Further, Uber's net income was a substantial $1.8 billion.
This profitability, which is in stark contrast to the billions of dollars the company was losing per year as recently as 2020, isn't a one-off. Over the trailing 12 months, Uber has generated nearly $8 billion in free cash flow. It ended the quarter with $6.0 billion in cash, cash equivalents, and short-term investments.
For a business that was once known for burning capital and endless losses, this robust profitability marks a massive turnaround.
Importantly, Uber's business benefits from two significant growth drivers: mobility (ride-hailing) and delivery (services primarily booked through the company's Uber Eats app). Both of these segments are performing well, and both are nearly equal in size, with first-quarter revenue from mobility at $21.2 billion and revenue from delivery at $20.4 billion. Measured in constant currency, mobility and delivery gross bookings during Q1 rose 20% and 18% year over year, respectively.
Ackman's $2 billion vote of confidence
Bill Ackman didn't just buy a little Uber stock -- he loaded up. According to Pershing Square's latest portfolio update, Uber represents 18.5% of his investment firm's U.S.-traded equity assets. He bought 30.3 million shares, worth around $2 billion.
"We believe that Uber is one of the best managed and highest quality businesses in the world," Ackman said in a post on X in February.
A look at Uber's strong fundamentals helps show why the investor is so upbeat about the stock. Business momentum like this, when combined with the stock's cheap valuation, is rare.
Self-driving ambitions without the heavy lifting
While Uber previously attempted to build its own autonomous vehicle unit, it has since pivoted to a more capital-efficient strategy. Instead of owning the technology outright, Uber has partnered with leaders in the autonomous vehicle space like Waymo and Aurora to bring robotaxis onto its platform.
This partnership model reduces costs and risk, while still allowing Uber to tap into what could be a multi-billion-dollar market. Waymo's autonomous vehicles are already live on Uber's platform in select markets, and the company expects this coverage to expand throughout 2025 and beyond.
As self-driving tech matures, Uber's platform-first model could prove to be a key competitive advantage. It doesn't need to win the autonomous vehicle hardware race -- it just needs to be the go-to place for consumers to hail those vehicles.
Uber has come a long way from its pre-IPO days of deep losses and uncertain economics. Today, it's a profitable, growing business with a defensible market position and exciting upside in autonomous transportation.
Ackman's $2 billion stake signals confidence not just in where Uber is, but where it's going. For long-term investors looking for a durable compounder, Uber may finally be ready for the spotlight. Sure, the stock has already surged more than 200% over the last three years. But there may be more room to run.
While there's always risk of technological disruption as well-capitalized competitors Tesla and Alphabet eye the space, the stock's low price-to-earnings ratio of under 15 at the time of this writing suggests that investors have arguably already priced these risks in. While there's no guarantee that Uber is able to overcome what will likely be an intensely competitive market in the coming years, it has already proven to investors it can face challenges head-on and come out stronger. It can likely do it again.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Daniel Sparks and/or his clients have positions in Tesla. The Motley Fool has positions in and recommends Alphabet, Tesla, and Uber Technologies. The Motley Fool has a disclosure policy.