Activist hedge fund firm Pershing Square has acquired a $2.3bn stake in Uber with founder Bill Ackman calling the ride-hailing firm “one of the best-managed and highest-quality businesses in the world,” according to a report by the Financial Times.

The announcement comes as Uber pivots toward new opportunities in autonomous vehicles and seeks to build on its recent streak of profitability.

Ackman revealed the investment after Uber reported weaker-than-expected fourth-quarter earnings, emphasising the company’s potential for long-term growth, particularly in the emerging autonomous vehicle sector, which he described as a “$1tn-plus opportunity.”

Uber’s shares rose 6.6% on Friday following Ackman’s disclosure, pushing the company’s market capitalisation to nearly $160bn, with Ackman expressinf confidence in that valuation, stating that its stock remains undervalued.

“We believe Uber is still trading at a massive discount to its intrinsic value,” Ackman wrote on X (formerly Twitter). “This combination of exceptional management, high quality, and undervaluation is extremely rare, especially for a large-cap company.”

While both Uber and Pershing Square declined to comment further, Ackman credited CEO Dara Khosrowshahi with steering the company toward profitability after years of turbulence under co-founder Travis Kalanick.

Uber reported its first-ever annual operating profit in February 2023, marking a pivotal moment for the company, which had faced challenges since its public debut in 2019. The IPO failed to meet lofty expectations of a $120bn valuation and became infamous for the largest first-day dollar loss for a US company.

Since taking the reins in 2017, Khosrowshahi has focused on tightening operations and streamlining the business, a shift that Ackman lauded in his announcement.

The report cites Ackman as also revealing that Pershing Square began acquiring Uber stock in January and now holds more than 30 million shares, although his relationship with the company dates back to its founding in 2009, when he made an initial investment through a venture capital fund.