Pershing Square Holdings: Uber Technologies ($UBER) Investment Case
Introduction In their 2025 Annual Investor Presentation, Pershing Square Holdings introduces a new investment in Uber Technologies Inc. ($UBER), positioning it as a high-quality business with substantial growth potential. Pershing Square, known for their strategic long-term investments, presents Uber as an attractive opportunity despite market concerns about autonomous vehicles (AVs). The presentation emphasizes Uber’s strong marketplace dynamics, operational improvements, and significant earnings growth trajectory. Pershing Square’s decision to invest in Uber reflects their confidence in the company’s business model, management team, and capacity for continued expansion, suggesting the stock could more than double in value over the next 3-4 years.
Business Overview
- World’s leading rideshare (mobility) and delivery (Uber Eats) marketplace
- Operates in 70 countries with 170 million monthly customers and 8 million drivers
- Approximately $160 billion in gross bookings split between mobility and delivery
- Led by CEO Dara Khosrowshahi, who has improved operational discipline and capital allocation
Market Position
- Leading global two-sided marketplace with strong and growing network effects
- Integrated platform with consumer and driver synergies across mobility and delivery
- Fast-growing international business accounting for over half of bookings
- Current trading multiple of 29x P/E, which Pershing Square views as undervalued given growth profile
Performance Analysis
- Unique Business Model:
- Strong network effects that reinforce supply and demand growth
- Large driver supply decreases wait times and user prices
- Large demand increases driver utilization
- Significant operational leverage with fixed-cost structure
- Financial Trajectory:
- Turned profitable in 2023
- Adjusted EBITDA growth from $1.7B in 2022 to $6.5B in 2024
- Current EBITDA margin of 4% versus 7% long-term target
- Management targets imply +30% annual EPS growth over the next several years
Growth Runway
- Mid-to-high-teens revenue growth potential
- Growth driven by new customers and increased frequency from existing users
- Expansion into new geographies and product offerings
- Increased penetration in mature markets
Market Dynamics and Opportunities
- Strong consumer and driver synergies from integrated platform
- Ingrained consumer behaviors driving expanding user frequency
- Limited headcount growth (3% annually) versus bookings growth (20% CAGR since 2019)
- Continued focus on operational efficiencies to limit future expense growth
Valuation and Capital Allocation
- Significant decrease in P/E multiple despite 50% increase in analyst earnings estimates
- Robust free cash flow supporting substantial capital return
- Strong revenue growth combined with excellent expense control
- Significant operating leverage driving margin expansion
Risks
- Market concerns about potential long-term threat from autonomous vehicles
- Regulatory challenges in certain markets
- Competition in both mobility and delivery segments
Other Key Points
- AV risk considered limited by Pershing Square due to:
- Delivery represents ~50% of bookings and unlikely to be affected by AVs
- International mobility is >50% of bookings where large-scale AV introduction is unlikely
- Large-scale U.S. AV rideshare introduction faces significant technological and regulatory hurdles
- Uber’s established partnerships with 14 AV companies across mobility, delivery, and freight
- Potential for AVs to expand the overall rideshare market significantly
- Pershing Square believes Uber’s share price could more than double over the next 3-4 years
Pershing Square views Uber as a compelling investment opportunity with a strong growth trajectory, highlighting its operational improvements, expanding margins, and limited risk from autonomous vehicles as key factors supporting their bullish outlook.
Click here for the full investor letter.
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