Bill Ackman is highly selective about which stocks he buys. His Pershing Square Capital Management hedge fund currently owns only 12 stocks. And two of those are different classes of shares for the same company -- Google parent Alphabet.
Not too long ago, Alphabet ranked as Ackman's favorite investment. That's no longer the case. The billionaire hedge fund manager is now loading up on Uber Technologies (UBER 3.41%).
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Hailing Uber
Ackman revealed in a post on X (formerly Twitter) on Feb. 7, 2025, that Pershing Square began buying shares of Uber in January 2025. He stated at the time that the hedge fund owned 30.3 million shares. That's the same number of Uber shares that Pershing Square disclosed in its 13-F regulatory filing for the first quarter of 2025.
The purchase catapulted Uber into the top spot among Pershing Square's holdings. The stock now makes up 18.5% of the hedge fund's portfolio, edging out Brookfield Corporation at 18.01%. As of March 31, 2025, Pershing Square's stake in Uber was valued at $2.21 billion.
This was the first time for Pershing Square to accumulate a position in Uber. However, it wasn't Ackman's first investment in the transportation company. The billionaire noted in his X post that he was "a day-one investor in the company through a small investment in a venture fund."
Why does Ackman like Uber so much?
Sometimes, when Ackman initiates a new position in a stock, we can only guess why he likes it. But not with Uber. He explained exactly why he bought the stock in his social media post earlier this year.
For one thing, Ackman is very familiar with Uber's business. He said that he has "been a long-term customer." Actor, producer, and director Edward Norton was an early fan of Uber. He showed the Uber app to Ackman. Both men decided to become ground-floor investors in what was then a start-up company.
Ackman is also betting on the jockey to some extent. He noted in his X post that "Uber has suffered from erratic management" in the past. However, he believes that current CEO Dara Khosrowshahi "has done a superb job in transforming the company into a highly profitable and cash-generative growth machine."
The billionaire hedge fund manager also views Uber as attractively valued (or at least did earlier this year). Ackman said, "Remarkably, it can still be purchased at a massive discount to its intrinsic value."
However, Uber isn't as cheap as it was when Pershing Square was scooping up shares in the first quarter. The stock has jumped close to 12% since Ackman's X post on Feb. 7.
NYSE: UBER
Key Data Points
Should you buy Uber stock, too?
Most Wall Street analysts seem to agree with Ackman's bullish view on Uber. Of the 54 analysts surveyed by LSEG recently, 13 rated the stock as a strong buy. Another 31 analysts rated Uber as a buy. The remaining 10 analysts recommended holding the stock. The average 12-month price target for Uber reflected an upside potential of roughly 15%.
I think Ackman and Wall Street could be right about Uber. The company continues to deliver strong revenue and earnings growth along with impressive free cash flow. It has multiple paths to growth, including autonomous ride-hailing services, food delivery via Uber Eats, and its Uber Freight transportation and logistics services.
However, the uncertainties Uber faces make me hesitant to jump aboard the bandwagon at this point. First, the company has stiff competition from Lyft in the U.S., Bolt in Europe, and Didi in Latin America. Second, autonomous ride-hailing could present both an opportunity and a threat to Uber. If Tesla is successful with its robotaxi launch, the company might gain market share at Uber's expense.
Ackman believes that Uber is a bargain. But the stock trades at a forward earnings multiple of 30.6. For Uber to be as attractively valued as Ackman thinks, the company will have to deliver exceptionally strong growth over the coming years. With the unknowns related to increasing competition, I'm not confident that it will be able to do so.
