What Happened?

Shares of ride sharing and on-demand delivery platform Uber (NYSE:UBER) jumped 9.5% in the afternoon session after famous investor Bill Ackman revealed a 30.3m stake (shares) in the company, valued at roughly $2.3 billion. Ackman, who is the CEO of Pershing Square Capital Management, added that Uber is trading at a "massive discount" and can be considered "one of the best managed and highest quality businesses in the world." 

Ackman said he's not new to Uber, and has been an investor since its early days. He highlighted Uber's early struggles with erratic leadership and praised CEO Dara Khosrowshahi's transformation of the company since 2017. Under Khosrowshahi, he acknowledged that Uber has evolved "into a highly profitable and cash-generative growth machine." 

Given Ackman reputation for quality research in the stock market, the market is likely to read the information positively for the company's prospects in the near term.

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What The Market Is Telling Us

Uber’s shares are quite volatile and have had 16 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business. 

The previous big move we wrote about was 2 days ago when the stock dropped 7.4% on the news that the company reported weak fourth-quarter results: gross booking guidance for the next quarter missed, and this is weighing on shares. 

Also, the comments during its earnings call suggest that Uber might take longer to commercialize the autonomous vehicle business. This stands in contrast to bullish comments by Tesla about its impending Robotaxi rollout. Also, while earnings exceeded expectations, it was largely driven by a $6.4 billion tax valuation release rather than operational improvements​. 

On the other hand, Uber increased its number of users this quarter, beating expectations. This led to revenue outperformance. Overall, this was a mixed yet weaker quarter for the company.

Uber is up 18.3% since the beginning of the year, but at $74.76 per share, it is still trading 13.4% below its 52-week high of $86.34 from October 2024. Investors who bought $1,000 worth of Uber’s shares 5 years ago would now be looking at an investment worth $1,840.

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