This Stock Could More Than Double By 2029, According to Billionaire Bill Ackman

Billionaire hedge fund manager Bill Ackman recently revealed his latest multibillion-dollar investment: mobility technology leader Uber (NYSE: UBER). According to a social media post by Ackman, Pershing Square Capital Management (the hedge fund he oversees) owns 30.3 million shares of the company.

At Uber's current share price, Ackman's investment is worth roughly $2.4 billion, which is one of the largest investments Pershing has ever made.

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In the same post announcing the investment, Ackman wrote, "[W]e believe that Uber is one of the best managed and highest quality businesses in the world." And given the company's scale and massive profitability (22.5% net margin over the past four quarters), it's tough to argue with that statement. He also went on to say he believes Uber trades below its intrinsic value and that Pershing would share more details about its investment thesis "shortly."

Pershing Square recently released its annual presentation to its investors, and it includes more details about why Bill Ackman and his team decided to invest in Uber. It also informed investors about his expectations for the stock's future performance.

Why did Ackman buy Uber?

In Ackman's presentation to Pershing Square's investors, he explained his Uber investment thesis in detail. Here are the main points, in simple terms:

• Uber's leading market share has given it growing network effects.
• Existing customers are using Uber more frequently as time goes on.
• Uber has tons of growth potential in new international markets, and the rapid growth in new markets has been impressive.
• Revenue has been growing much faster than expenses, which has resulted in excellent margin expansion, and this trend is likely to continue.
• Management is guiding for earnings growth of more than 30% for at least the next few years and anticipates growing its adjusted earnings before interest, taxation, depreciation, and amortization (EBITDA) margin (as a percentage of gross bookings) from 4% to 7% over time.
• Since early 2024, Uber's stock is slightly down although earnings estimates are up significantly, resulting in a forward price-to-earnings multiple (P/E) of less than 30 -- highly attractive for such a fast-growing, profitable business.

Additionally, many analysts are worried about the disruptive potential of autonomous vehicles (robotaxis), but Ackman believes these fears are overblown. On the delivery side, which is roughly 50% of Uber's bookings, the need for a human courier keeps this part of the business rather insulated.

On the ride-sharing side, while robotaxis could eventually replace a significant percentage of human-operated vehicles, this is likely to be a long way off. Simply put, the technology isn't there yet, federal and state regulations have been quite cautious regarding fully autonomous vehicles, and there's a lot of new infrastructure that would need to be put in place.

Instead, Ackman sees the most likely scenario will be autonomous-vehicle manufacturers partnering with Uber, as opposed to building their own infrastructure. After all, attempting to build a robotaxi infrastructure from scratch is a heavy lift. Even deep-pocketed players like General Motors' Cruise are starting to bow out. And the combination of more supply of vehicles on the road and the lower per-mile costs expected with robotaxis is likely to be a net positive for demand.

Can Uber double in just a few years?

Ackman shared an expectation for Uber's stock price in his presentation, stating that "Uber's share price is likely to more than double over the next three to four years." This implies an annualized total return of at least 19%. With potential earnings growth of 30% or more for Uber for the next several years, this certainly seems possible.

Of course, there is quite a bit of execution risk, and Uber is a somewhat cyclical business (especially on the delivery side). But if autonomous-vehicle concerns end up being overblown, Ackman's prediction of a double within a few years is certainly possible.

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Matt Frankel has positions in General Motors. The Motley Fool has positions in and recommends Uber Technologies. The Motley Fool recommends General Motors. The Motley Fool has a disclosure policy.