Why Did Bill Ackman Buy Uber?

In early 2025, billionaire investor Bill Ackman, CEO of Pershing Square Capital Management, revealed a substantial new position in Uber Technologies. By January 2025, Pershing Square had accumulated 30.3 million Uber shares, a ~1.4% stake worth about $2.3 billion.

Ackman framed Uber as “one of the best managed and highest quality businesses in the world”, yet “still available at a massive discount to its intrinsic value”​

We examine how Uber aligns with Pershing Square’s historical investment themes of margin expansion, competitive moats, and strong management and compare this stake to past Ackman investments with similar risk-reward profiles to answer the question why he made such a huge bet on the ridesharing firm.

Catalysts Driving the Uber Investment Decision

Under CEO Dara Khosrowshahi’s leadership since 2017, Uber transitioned from years of heavy losses to consistent profitability by 2024. Ackman highlighted that Uber has “become highly profitable and is generating a ton of cash” under current management​.

Just a couple of years ago, Uber hit its first full-year operating profit and as well as positive GAAP net income, a milestone since its 2019 IPO​.

Uber’s free cash flow exemplifies this turnaround producing $3.4 billion of free cash flow a couple of years ago, a dramatic rise from just $390 million in 2022​.

Like Ackman, management was clearly of the belief that the stock was undervalued and authorized the first-ever share buyback of $7 billion in early 2024.

As one analyst noted, “Uber is hitting on all cylinders and has decided it’s time to return capital back to the owners,” reflecting “operational discipline perfectly executed by CEO Dara Khosrowshahi.”​

Dara Slashed Costs and Grew Revenues

Uber’s top-line has continued to grow at a healthy clip, even as the company cuts costs.

For Q4 2024, revenues came in at $11.96 billion, beating analyst estimates and rising ~20–25% year-over-year.​

Gross bookings grew 18% in Q4, reflecting strong demand​. Better yet, profits are on the rise too.

Adjusted EBITDA for Q4 2024 jumped over 40% year-on-year to $1.84 billion​, indicating improved operating leverage.

For full-year 2024, Uber’s operating income was about $2.8 billion on ~$44 billion revenue, a ∼6% operating margin​ and a stark improvement from negative margins just a couple of years prior.

Management forecasts this trajectory to persist, and forecasts high-30s to 40% growth in adjusted EBITDA over the next three years, outpacing mid-teens bookings growth​. For this to take place, Dara and his team are betting on ongoing margin expansion, a critical factor for Pershing Square’s value thesis.

Ackman’s team often targets companies at an inflection point where profitability is poised to ramp up, and Uber’s financials in 2024–2025 fit that profile.

Uber Trading at Massive Discount to Fair Value?

Despite the progress made, Uber’s valuation in early 2025 suggested lots of room for appreciation.

At around $75–78 per share in February, Uber traded at roughly 23× forward earnings​, a multiple not overly demanding given its profit growth rate.

The stock had risen ~30% in the first weeks of 2025​, reaching all-time highs, yet Ackman argued the market still underestimates Uber’s intrinsic value.

The slight pullback after Q4 earnings, when shares dipped ~5% on an earnings “miss”, may have provided a favorable entry point​.

Ackman’s conviction that Uber could be worth significantly more in the long run – “a massive discount to its intrinsic value,” as he put it​, indicates he sees valuation upside alongside the strong fundamentals.

Does Uber Have Any Real Rivals?

Uber’s market standing in ride-hailing and food delivery is a major draw for an investor like Ackman. The company is the clear leader in North America ride-sharing and has a global presence unmatched by any single competitor​.

A key moat that Uber now has is in the form of network effects because the largest base of drivers and riders translates to faster pickup times and broader coverage.

Ackman praised Uber as a “highest quality business”, which in his framework implies strong competitive moats​.

Uber’s moat comes from its two-sided platform network, brand recognition, and infrastructure that makes it difficult for new entrants to replicate at scale.

Even in the U.S., Lyft’s attempts to lure riders with aggressive pricing have had limited impact on Uber’s leadership​.

In food delivery, Uber Eats now ranks as a top players and has an entrenched market position that aligns with Pershing Square’s preference for businesses with durable competitive advantages.

Ridesharing Is The Tip of the Iceberg

Another aspect of supporting Ackman’s investment thesis in Uber is that it’s not just a rideshare app but rather it’s a platform for mobility, delivery, and logistics.

Uber Freight, while smaller, extends Uber’s reach into enterprise logistics.  For shareholders there is some comfort because a dip in revenues in one division can be compensated for in others.

Uber can also tap into existing customers to convert say ride customers into food delivery customers so the moat grows ever wider.

Pershing Square has historically gravitated towards companies that build multi-faceted businesses with high customer loyalty, and Uber’s broad service suite contributes to that.

Ackman himself noted he has been a “long-term user and admirer of Uber” since its early days​, emphasizing the platform’s value proposition and stickiness with consumers.

Ackman’s Investment Is a Bet on Dara 

Ackman credited Khosrowshahi with turning Uber around after a period of “erratic management” under the prior regime​.

Since become CEO in 2017, Dara has been transformative and the results are clear to see in Uber’s profitability and execution. Ackman stated, “since CEO Dara Khosrowshahi took the reins… he has made Uber a very profitable company that generates significant cash flow.”​

In Uber’s case, it seems clear that no activist intervention will be taken or is needed because Ackman is effectively betting on the existing management team to deliver in the same vein as they have already. The alignment of a talented CEO, a well-regarded CFO, and a focused strategy adds to Uber’s competitive moat and was a key factor in Ackman’s decision.

User Preferences For Ridesharing Favor Uber

Uber’s business-focused segment, such as Uber for Business and corporate accounts, saw a 50% surge in bookings in late 2024 amid office re-openings​.

Similarly, ongoing shifts in consumer behavior thanks to more comfort with app-based services for transportation and delivery resulted in Uber’s user base growing.

These trends helped Uber’s rides segment recover and exceed 2020-21 era levels in many cities. At the same time, urbanization and shifting preferences among younger consumers who opt for rideshare over car ownership provide a secular growth runway for Uber’s mobility services.

Ackman’s investment recognizes that Uber is riding these trends to capture disproportionate benefit given its scale.

What Has Everyone Got Wrong About Uber?

Rather than develop its own robotaxis – Uber sold its self-driving unit in 2020, Uber is looking to become the network of choice for AV operators.

In 2025, CEO Dara Khosrowshahi emphasized Uber’s “expansive network” as a reason AV tech companies want to partner with Uber​. For example, Alphabet’s Waymo selected Uber’s app as the exclusive platform for launching its robotaxi service in Austin, TX​.

This means as autonomous vehicles roll out, Uber can potentially intermediate rides without owning the vehicles – collecting fees on AV rides much as it does for human-driven rides.

Such partnerships turn a disruptive threat into a potential profit center. Ackman’s comment that Uber is “one of the best-managed” companies​ and the market’s underestimation of its value suggests he sees upside optionality in Uber’s tech strategy.

If autonomous ride-hailing grows, Uber’s massive user base and logistics network give it a powerful advantage to remain a central player in mobility.

Investors in 2025 were only cautiously crediting this since Uber traded at a reasonable earnings multiple despite this long-term option value​. Ackman appears to view it as an attractive “kicker” to the core investment thesis.

Are Price Wars In The Past?

By 2025, the regulatory and labor framework for gig economy companies like Uber had started to stabilize in key markets. For instance, California’s Prop 22 that passed in 2020 allowed drivers to remain independent contractors with some benefits, and other jurisdictions were exploring similar models.

While regulatory risks remain, such as ongoing debates in the EU about gig worker status, Uber has shown an ability to adapt with modest price increases or fees funding driver benefits without derailing its economics.

A more certain regulatory outlook reduces one overhang that previously made investors cautious. Industry-wide, both Uber and its rivals have generally raised prices to ensure driver earnings, suggesting a more rational competitive environment.

Ackman’s investment likely factors in that the era of cash-burning subsidy wars in ride-hailing is largely over. Instead, the industry trend is toward sustainable, profitable growth, a dynamic that hugely benefits the market leader, Uber.

This shift mirrors scenarios in other industries Pershing Square has invested in, where aggressive competition gave way to a more rational market structure, allowing the strongest player to thrive much as, say, airline consolidation benefited the largest carriers.

In summary, the confluence of improved financials, a stronger competitive moat, and positive industry trends in 2024–2025 made Uber a compelling target for Pershing Square. Ackman himself noted that such a “favorable combination of attributes is extremely rare, particularly for a large-cap company.”​

It’s this rarity of a high-quality, well-run business with significant growth and margin expansion ahead, yet still undervalued that drove the decision to invest.

Alignment with Pershing Square’s Investment Themes

Pershing Square’s portfolio strategy has long centered on a few core investment themes. Ackman tends to seek out companies with undervalued yet strong business models, where specific catalysts can unlock margin expansion and shareholder value. Uber fits several of Pershing Square’s hallmark criteria:

Both Margins and Cash Flow Are Growing

A common thread in Pershing Square investments is the opportunity for a significant upswing in profit margins and cash generation, often through operational efficiencies or scale.

Uber’s narrative is precisely that after years of negative margins, it is now at a tipping point of accelerating profitability.

Ackman has publicly pointed out Uber’s “significant cash flow” generation under Dara​. The expanding adjusted EBITDA margins and first-time net profits demonstrate a trajectory of margin expansion that Pershing Square finds attractive.

For comparison, in Ackman’s 2022 investor letter discussing a new stake in Netflix, he highlighted “substantial margin expansion” opportunity due to economies of scale​.

This echoes why Uber appeals in 2025 because as revenues grow in the high-teens on a percentage basis and costs rise more slowly, incremental margins are very high.

Uber’s ability to translate top-line growth into disproportionately higher operating income as evidenced by guidance of 30%+ EBITDA growth vs ~20% bookings growth​ aligns well with Pershing Square’s playbook.

Like Buffett, Ackman Looks For Wide Moat Businesses

Pershing Square’s team explicitly looks for “high-quality businesses” with “powerful competitive moats,” as noted in their discussions of companies like Netflix and others​.

Uber checks this box and benefits from strong network effects – a classic economic moat – where more riders attract more drivers, and vice versa, creating a self-reinforcing market share lead.

Over and above that, Uber’s multi-vertical platform of mobility, logistics and delivery increases customer stickiness and scale advantages that are hard to replicate. This is akin to other Pershing Square investments such as Starbucks which has global brand loyalty and scale in coffee or Canadian Pacific Railway which Ackman bet on a business with irreplaceable rail network assets.

In Uber’s case, the “moat” is a mix of technology, network, and brand giving it pricing power. Ackman’s statement that Uber is “one of the highest quality businesses in the world”​ shines a light on his view that Uber’s competitive standing is exceptional.

Strong Management and Governance

Pershing Square tends to pounce on a couple of situations, such as (a) management is outstanding but the market hasn’t recognized the company’s potential, or (b) management/board changes could unlock value via activism. With Uber, it is very much the former. Ackman’s praise for CEO Dara Khosrowshahi’s “excellent management” indicates Uber’s leadership is a selling point​.

Dara’s track record of overhauling Uber’s culture, focusing on profitability, and executing strategic deals, such as divesting non-core ventures, partnering on autonomy, appears to give Pershing Square confidence that Uber will be managed for long-term shareholder value.

Ackman has a history of working constructively with such management, such as when he supported CEO Kevin Johnson’s turnaround plan and praised his actions like cost cuts and store portfolio rationalization​.

Similarly, at Chipotle, Pershing Square worked cooperatively to install a new CEO Brian Niccol who revitalized the company​.

In Uber’s case, no change was needed because the leadership already aligns with Ackman’s value creation goals.

This strong management theme is central to Ackman who is likely confident that Uber’s team will wisely deploy its growing cash flows, such as via share buybacks.

Uber’s board now includes industry veterans and is free of founder-control issues that plagued it pre-2017, which likely gave Pershing further comfort.

Long-Term Growth Runway

While value-focused, Pershing Square also goes after companies with significant long-term growth prospects to compound earnings. Uber’s total addressable market including the global mobility and delivery economy is in the trillions of dollars yet Uber’s current revenues are just ~$45 billion annually. The runway for growth through deeper market penetration, new services, or geographic reach remains very large.

Ackman noted that it is “extremely rare” to find a large-cap with Uber’s combination of growth and quality at a bargain price​. This mirrors his rationale for other investments like Netflix which benefited from the secular growth of streaming worldwide) and even Universal Music Group that took advantage of the global growth of music streaming.

Uber’s ability to grow in the double-digit range for years, in an industry that itself is expanding, fits the profile of a compounder Pershing Square wants to own for the long term.

Putting it all into the mix, Uber encapsulates Pershing Square’s “ideal investment” in that it’s a high-quality, moat-protected business with improving margins, led by shareholder-oriented management, and set to grow in an expanding market, all the while being temporarily mispriced by the market.

Why Did Bill Ackman Buy Uber?

Bill Ackman bought Uber on behalf of Pershing Square because it’s at inflection point where sustainable profits and expanding margins are expected to substantially increase shareholder value.

Ackman has a strong conviction that the company’s best days lie ahead and that the market hasn’t fully priced in its transformation.

The investment was catalyzed by Uber’s financial inflection into profitability and cash flow generation, alongside new leadership in a growing industry, and foresight in areas like autonomous vehicles.

These catalysts from a blowout improvement in free cash flow​ to partnerships that turn technology disruption into opportunity​ reinforced that Uber now possesses both quality and momentum.

Ackman’s thesis leverages Pershing Square’s classic themes that a business with a strong moat and capable management can expand margins and deliver outsized shareholder returns once early missteps are corrected.

Uber today mirrors the profile of past Pershing Square winners, a high-caliber company temporarily undervalued due to legacy issues or transient market concerns. 

Going forward, the risk-reward in Uber will be judged by whether the company can maintain its growth, widen its platform’s reach, and stay ahead of competitors and regulators. Ackman’s stake suggests confidence that it will do so.

If Uber’s earnings compound as projected and its “massive discount” to intrinsic value closes, Pershing Square stands to earn substantial rewards, much like it did in comparable situations historically.

The bottom line is Ackman’s Uber investment underlines a consistent narrative which is to find a great business, wait for an opportune moment when others doubt it, and invest with a long-term horizon. 2025 appears to be that opportune moment for Uber, and Pershing Square’s research-driven, concentrated investment approach is now firmly hitched to Uber’s ongoing ride.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.