Bill Ackman's biggest trade ever

That makes Uber one of the best performing tech stocks over the past few years, outperforming Microsoft, Google, Apple and Tesla by at least three times.

After a huge run-up like that, most investors would think the easy money has been made. But one of the world’s most famous investors, billionaire Bill Ackman, believes the real rally is just getting started.

Ackman believes the market is overlooking powerful catalysts 

That could potentially ignite Uber’s next phase of growth over the coming years.

We’ll get into that in this video, but first, you have to understand Bill Ackman. He’s a high-conviction, high-risk investor. When he’s right, the wins are legendary.

He invested in a bankrupt mall operator, General Growth Properties, and earned investors 100 times their money. His move has been called a masterclass in bankruptcy investing. In 2012, he took control of the struggling Canadian Pacific Railway, installed a new CEO, and tripled the stock price in just a few years.

But when he’s wrong, the losses are catastrophic. His trade on Valeant Pharmaceuticals in 2015 resulted in a $4 billion loss. That’s not all. Ackman’s outspoken nature has led to drawn-out quarrels as well. For example, he famously shorted Herbalife for $1 billion, calling it a pyramid scheme. But after a five-year battle, he exited the position at a major loss.

This history of epic wins and spectacular failures is what makes his Uber trade so compelling.

So, which path will Uber follow? To find out, we need to look at the business itself.

Under CEO Dara Khosrowshahi, Uber has undergone a stunning financial turnaround. Once famous for burning billions, the company is now a cash-generating machine.

Key metrics show a fundamental shift in the business 

Free cash flow has shot up dramatically, turning from negative to positive in 2022. That’s the cash a company has left over after covering all its expenses—a sign of financial health.

Net income also turned positive in 2023, proving the business can be profitable after a long period of spending more than it took in.

But the financial turnaround is only half the story. The overlooked catalyst that Ackman is pinning his strategy on lies in three new high-margin businesses most people don’t associate with Uber.

One is advertising. Uber is building a high-margin advertising business directly on its ride-sharing and Eats platforms. Launched in 2022, Uber Ads has already grown to over $1.5 billion in annual revenue—a 60% year-on-year growth rate.

The second growth catalyst is Uber Freight. Ackman sees potential in this growing multi-billion dollar logistics arm, which operates as a brokerage for the shipping industry.

Uber Freight is using AI on its platform to provide trucking companies with more optimised routes. A recent industry report estimated that roughly 35% of trucks on US freeways are empty. Uber has set out to solve this problem—almost exclusively with AI.

The third is self-driving. Uber has partnered with leaders in the self-driving space like Waymo and Aurora to bring robo-taxis onto its platform. This allows Uber to tap into a potential multi-billion dollar market.

Waymo’s autonomous vehicles are already live on Uber’s platform in select areas, and the company expects that coverage to expand throughout 2025 and beyond.

This is the core of Ackman’s bullish thesis. He believes these new ventures—combined with Uber’s newfound financial discipline—could power the next wave of growth.

But is it enough to outweigh the risks?

This trade faces two major threats that could easily turn it into a bust

In the US, Uber still dominates market share with 76% of monthly ride-share sales, compared to 24% for Lyft. But these competitors mean Uber must continue to compete on price to maintain dominance.

In the even more competitive food delivery space, Uber Eats is in a head-to-head battle with DoorDash. And it’s a battle Uber isn’t winning. DoorDash commands nearly two-thirds of monthly sales, compared to less than a quarter for Uber Eats.

That presents a significant challenge, since delivery accounts for 32% of Uber’s revenue. Rides make up 56%, and freight comes in at 11%.

A ruling that forces Uber to classify its drivers as employees instead of independent contractors in the US could add more than $4 billion in annual costs. Precedents have already been set, like in the UK, where Uber must now pay minimum wage and benefits—raising operational costs significantly.

Ultimately, Bill Ackman is counting on Uber’s financial transformation—and on its new high-growth ventures—to outweigh the very real regulatory and competitive risks.

The success of this trade hinges on whether Uber can continue its impressive execution while navigating these external storms.

It’s a classic Bill Ackman trade—bold, controversial, and with billions of dollars on the line.

At Capital.com, we’ll continue to keep you updated on trades by influential investors like Bill Ackman along with trending tech stocks like Uber.

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