The average investor can find lucrative investment ideas by following the experts. Bill Ackman, the billionaire hedge fund manager who runs Pershing Square Capital Management, is one such professional. His firm's strategy involves making bold bets on a select few businesses, a focus that rhymes with Warren Buffett's philosophy.
That's why it's noteworthy when one position commands 18.5% of the fund at a market value of $2.2 billion (as of March 31). This company is the single largest holding for Ackman.
As of June 12, this growth stock has soared 44% in 2025. That impressive performance beats the major indexes by a wide margin. Maybe it's time for investors to take a closer look at this business.
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Strong fundamentals
The stock that Pershing Square made a big investment in is Uber (UBER -1.97%). When the hedge fund first bought shares in January, the stock had just come off a disappointing 2024 that saw the share price dip 2%. After that kind of upsetting performance, Ackman still was impressed with Uber's strong fundamentals.
Those fundamentals are worth highlighting. Growth is a key part of the Uber story, even though it's a global scale platform. Revenue was up 14% in Q1 (ended March 31), driven by double-digit gross booking gains in both the mobility and delivery segments. It's encouraging to see both parts of Uber's business registering meaningful growth, particularly in the uncertain economic environment.
Another positive development deals with Uber's profitability. The company generated over $1.2 billion in operating income just in the last three months, highlighting how financially sound it has become. For an indication of just how much Uber has evolved, understand that in Q1 2019, the business posted a massive $1 billion operating loss.
The management team is optimistic. They expect adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to increase at a "high 30s% to 40%" compound annual rate between 2024 and 2027.
Competitive positioning
Uber's most defining characteristic is probably that it benefits from a powerful network effect. As more riders come to the app to book a trip, drivers who are looking to boost their income will follow because there is more of an opportunity to make money. With this added capacity, Uber becomes more valuable to riders. It's a positive feedback loop.
That network effect underscores Uber's remarkable competitive position. This is becoming more evident with the rise of autonomous vehicle (AV) technology. Uber's direct relationship with riders, in particular, makes it a very valuable partner for AV firms looking to achieve faster adoption. Of course, it benefits Uber by giving it a low-risk, capital-light avenue to get into this space that just might be the future of transportation.
Uber is one of the rare businesses whose name is used also as a verb. This highlights how well the service resonates with people. Alphabet's Google, Airbnb, and Netflix are other prominent examples. These are all dominant enterprises in their own right.
Reasonable valuation
The path of least resistance is to immediately follow in Bill Ackman's footsteps and buy Uber shares. But investors must take the time to understand the investment case with this opportunity.
Once that hurdle checkpoint is cleared, the next step is to take the valuation into account. Uber's stock has been on quite the run, accelerating 109% higher since June 2023. Strong financial performance in recent years is doing a great job of winning over the investment community.
But the valuation is still very reasonable. The stock trades at a forward price-to-earnings ratio of 23.5. Maybe now is a good time to consider initiating a position in the company.
