Uber Technologies Inc. (UBER) shares soared on Friday after billionaire investor Bill Ackman revealed a substantial $2.3 billion stake in the ride-hailing giant. Through his firm, Pershing Square Capital Management, Ackman disclosed ownership of 30.3 million Uber shares, representing approximately 1.4% of the company’s outstanding shares. Based on Uber’s closing price of $75.56 on Friday, this stake is valued at $2.29 billion.
Ackman expressed strong admiration for Uber’s transformation under CEO Dara Khosrowshahi, calling it “one of the best-managed and highest-quality businesses in the world.” He also emphasized that Uber’s stock is trading at a significant discount to its intrinsic value, making it a compelling investment. “This favorable combination of attributes is extremely rare, particularly for a large-cap company,” Ackman stated.
The announcement follows Uber’s impressive fourth-quarter earnings report, which showcased a 20% year-over-year (YoY) revenue increase to $11.96 billion, exceeding Wall Street estimates of $11.78 billion.
Net income skyrocketed 382% YoY to $6.88 billion, although this figure included a $6.4 billion benefit from a tax valuation release and a $556 midyear over a year on the pre-tax gain from the revaluation of Uber’s equity investments. Adjusted earnings per share (EPS) of $3.21 far surpassed the anticipated $0.48.
Looking forward, Uber’s first-quarter 2025 outlook projects gross bookings between $42.0 billion and $43.5 billion. However, the company cautioned about potential currency fluctuations, which could create a headwind of approximately 5.5 percentage points.
“…Despite the strong earnings report, several analysts adjusted their price targets for Uber. Citi lowered its target to $92 from $98 but maintained a ‘Buy’ rating. JPMorgan reduced its target to $90 from $95, keeping an ‘Overweight’ rating. Similarly, Piper Sandler adjusted its target to $80 from $82, also retaining an ‘Overweight’ rating. CWEB analysts, meanwhile, have a ‘Buy’ rating and a price target of $110, citing Uber’s strong growth potential and diversified revenue streams.”
CWEB Analysts’ Perspective:
CWEB analysts believe Ackman’s investment signals growing confidence in Uber’s long-term growth potential, particularly as the company continues to improve profitability and cash flow. “Ackman’s significant stake represents a strong vote of confidence in Uber’s management team and its ability to capitalize on the expanding global ride-hailing and delivery markets,” a CWEB spokesperson commented. “However, investors should remain mindful of potential challenges, including regulatory hurdles and currency volatility, which could impact future performance.”
CWEB analysts further suggest that as Uber continues to innovate and expand its ecosystem, encompassing its delivery and freight segments, the company is well-positioned to maintain its leadership in the mobility sector. They advise investors to closely monitor macroeconomic conditions and competitive pressures, which could influence Uber’s growth trajectory.
Ackman concluded his statement by suggesting he will share more insights on his Uber investment thesis shortly, leaving investors anticipating further details.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research or consult a financial advisor before making investment decisions.
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