Ackman's Uber Bet: Forecasts Double Growth and Margin Expansion

Ackman's recent move to invest in Uber points to strong earnings growth ahead. Investors remain optimistic as consensus estimates indicate a 37% growth in EPS by 2026. This bullish outlook is critical for Uber's stock performance in the next few years.

Date: 18-02-2025

AI Rating: 7

Earnings Growth and Margin Expansion Highlighted
Ackman and Pershing Square Capital Management's investment in Uber focuses on robust earnings growth and margin expansion. The report emphasizes Pershing's belief that Uber’s earnings growth could be significant, projecting at least 30% annualized growth over several years, driven by mid-to-high-teens top-line growth and share repurchases.

The prospect of earnings per share (EPS) growth is particularly notable, with Wall Street consensus estimates suggesting a 37% increase in diluted EPS in 2026 and continuous growth into 2028. Such a trajectory boosts investor confidence and might lead to positive movements in Uber's stock price as these earnings forecasts get closer to fruition.

Ackman also points out that Uber’s cost structure—illustrated by a mere 3% increase in total employees since 2019 alongside a 20% rise in total bookings—positions the company for operational leverage, enhancing profitability margins. This operational efficiency may contribute to long-term profit margins, making Uber an attractive investment proposition for growth-oriented investors.

The firm's focus on a significant stake in Uber, now totaling 30.3 million shares worth approximately $2.4 billion, signals strong conviction in the company's financial health and market strategy. If Uber can deliver on the anticipated earnings growth and manage its costs effectively, its stock may indeed respond positively, aligning with Ackman's claim of potential doubling in value over the next few years.

In summary, the emphasis on EPS growth and a potential rise in profit margins makes this investment scenario particularly appealing, indicating that Uber's financial trajectory will be a crucial factor for its stock price in the near future.

Stocks: UBER