February 07, 2025 at 04:32PM
Ackman runs a super-concentrated fund and rarely takes new positions. This one would be worth about $2.25 for the Fund that has somewhere around $20 billion under management.
Uber shares dumped on earnings earlier this week but stormed back the following day and continued higher today. This certainly won’t hurt.
I can make a pretty good case for Uber as it’s churning out a 5% free cash flow yield and still growing very rapidly.
The bear case is that Tesla and other robotaxis are going to destroy the business. However the bulls case — which the CEO has outlined — is that there are going to be many auto companies that solve autonomous driving. Even if Tesla solves it a year before anyone else, it can’t produce nearly enough cars to dominate the market before others catch up.
That will ensure it’s a fragmented market and that Uber remains at the center of the network ecosystem, taking what is essentially a royalty as it’s 180 million users (and growing) continue to use it whether it’s hailing a car driven by a person or a robot.
Here is what Ackman said, including his celebrity name drop:
I have been a long-term customer and admirer of Uber beginning when Edward Norton showed me the app in its early days. I was also fortunate to be a day-one investor in the company through a small investment in a venture fund.
While a great business, Uber suffered from erratic management. Since he joined the company in 2017, Dara Khosrowshahi CEO has done a superb job in transforming the company into a highly profitable and cash-generative growth machine.
We believe that Uber is one of the best managed and highest quality businesses in the world. Remarkably, it can still be purchased at a massive discount to its intrinsic value. This favorable combination of attributes is extremely rare, particularly for a large cap company.
We will have more to share about our thinking on the company shortly.
Shares of Uber are up nearly 8%.
This article was written by Adam Button at www.forexlive.com.
