Bill Ackman, the legendary billionaire hedge fund manager over at Pershing Square Capital Holdings, has a new position, and it’s caused quite the bullish crowd to come herding over. Undoubtedly, if Bill Ackman makes a move, many of his fans are sure to follow suit, echoing the “Buffett premium” that newly-announced Berkshire Hathaway (NYSE:BRK-B) stock holdings tend to get upon their announcement.

If you haven’t been tuning in, the new Bill Ackman bet that’s been the talk of the town in the financial scene this week is ride-hailing juggernaut Uber (NYSE:UBER). Ackman, who started buying up shares last month, sees the firm as trading at a “massive discount.” With a position worth around $2.3 billion, this bet has really moved the needle higher on shares of the top ride-hailing app over the past few sessions.

Undoubtedly, the so-called “Ackman premium” appears to have propelled shares close to $79 per share. And with the stock up anywhere from 12-21% from the time that Ackman may have initiated his position, I’m sure many investors are more than willing to pay up to invest alongside the billionaire who made a fortune in the heat of the panic during the COVID crash of 2020.

Though we won’t know for sure what price Ackman paid, I’m sure many fence-sitters on Uber stock are now more than convinced that it’s time to get in despite coming off a less-than-stellar quarter that saw a weaker guide for the coming first quarter of 2025. Indeed, buying the dip in Uber has paid off in a hurry, thanks to its newest bull. But the big question remains: is it too late to follow? And just how “undervalued” could UBER stock still be after the past week’s red-hot run-up?

Perhaps autonomous vehicles will be a net positive for Uber in the long run.

Strong present-day fundamentals aside, the long-term future of ride-hailing is clouded by uncertainty, with autonomous vehicles (AVs) and robotaxis that could change the market forever. Indeed, the top dog in robotaxis looks to be Waymo, which is sure to be a valued partner of Uber as robotaxis roll out across the nation. As more AV firms build their own apps, it will be interesting to see how the market reacts.

Personally, I think many of Uber’s critics discount Uber’s ability to thrive in the robotaxi age. It has an impressive network and algorithms to beat. If anything, Uber’s services could be vital as robotaxis looks to gain the trust of Americans. Uber is already a trusted name in ride-hailing. Perhaps establishing one’s AV presence on the Uber platform could be necessary to smoothen the rollout of robotaxis in the coming years and decades.

In any case, Uber looks like it could be a go-to hub for many autonomous vehicle firms, especially as the technology, like large language models (LLMs), becomes commoditized with every new competitor that hits the market. Maybe it’s not the underlying technology itself where the profit lies but the capital-light hub where the technologies will be put to work.

Either way, I share Ackman’s enthusiasm about Uber. Part of the reason shares look so undervalued is because of a misunderstanding of the business and its role in the AV transition. Just because AVs will be available in your city doesn’t mean drivers are going to be put out of work.

Would you trust a driverless vehicle in the earlier stages of a rollout?

Many people would be fine with that. But many others would likely prefer a driver, even if it means paying a few bucks more per ride. It’s quite jarring to be driven somewhere with nobody behind the wheel. And if I had to guess, it’s going to take a few years (or perhaps longer) before the masses are fully comfortable with driverless vehicles.

Maybe when there’s more data on its safety, the masses will be convinced to go with AVs over drivers. But for now, Uber offers the choice, and it will likely always offer such a choice to its valued customers as it plays a critical role in the transition. Uber drivers, breathe a sigh of relief because the robots aren’t yet coming for your job. Even if robotaxis do get very good and cheap, not everyone will feel safe without a person in the driver’s seat. 

Waymo is teaming up with Uber for a reason. It’s because Uber brings ample value to the table. Even if robotaxis dominates the roads of the future, Uber isn’t going anywhere. It’s a transportation hub and one that has a wider economic moat than many people would give it credit for. There will be many winners from the AV revolution—Ackman’s $2.3 billion bet suggests Uber will be one of them.

The bottom line on Uber

After a forgivable quarterly fumble, Uber stock still looks like a robust long-term bet. The stock is cheap at 16.9 times trailing price-to-earnings, and the business is well-managed—as Ackman noted—and ready for the AV transition, however long it takes.

All considered, I don’t think it’s too late to follow Ackman, even if it means buying in the $70s instead of Ackman’s cost basis, which likely lies in the $60s.

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