Get your daily dose of business updates on WhatsApp. Altimeter Capital Management LP. See here for a complete list of exchanges and delays. Meta stock is down over 61% in 2022. Sign up for free newsletters and get more CNBC delivered to your inbox. I think you're gonna see monetization gains against IDFA and either way we lap that issue in Q3 and Q4. Right? The lagging stock price under this Board's control and supervision directly reflects substantial underperformance in terms of operational reliability, customer satisfaction, market share, profitability, and return on invested capital. The letter is the latest sign that Meta investors are starting to express reservations about the company's recent performance. Copyright 2023 Bennett, Coleman & Co. Ltd. All rights reserved. Read More . But admittedly, you know, nights like tonight we'll we'll get we'll catch a little less sleep. In fact, we believe that augmented and artificial intelligence has the potential to drive more economic productivity than the internet itself. The comp against IDFA was very difficult in Q1 and will again be difficult in q2. If multiples expand then you have even more upside. Experience Your Economic Times Newspaper, The Digital Way! Ram Parameswaran is the founder of Octahedron Capital, a global, growth-oriented investment firm that seeks to make concentrated investments in leading public and private companies that drive the world's internet economy. Neither Altimeter, nor any of its affiliates or personnel, offers investment advisory services via the internet. Advertisement Gerstner, through Altimeter, manages over $15.0 billion worth of investments across private equity and venture capital. "Time to Get Fit an Open Letter from Altimeter to Mark Zuckerberg (and the Meta Board of Directors).". If you have a two-to-three-year time horizon, there is no doubt there are a lot of stocks that are going to be up well over 100% off this bottom. At first glance, the rules of English capitalization seem simple. Is it close to being done? Dave Baszucki of Roblox describes the metaverse as the natural evolution of communication a multi-device world, including the phone, that is best thought of as a better version of text, video, and voice that will make us feel more connected. We do not take job reductions lightly. With SNOW currently trading at $242, that stake is now worth $8.8 billion. With Snowflake, the question as to whether or not that business is going to compound, I think is not one that many people will debate. As such, we think during this period of growth transition and economic uncertainty, the company should decrease capex by at least $5B and maintain this discipline until revenues re-accelerate bringing our capex as a percentage of revenue more in line with our large cap peers. Investopedia does not include all offers available in the marketplace. But what is the right amount? This will alert our moderators to take action. Why 20%? Welcome to "Overtime.". But you also (sometimes) capitalize the first word of a quote. He argued that this was "one of the big reasons behind these price cuts.". What is the connection between those three companies. The conventional wisdom press and investor is that the core business hit a wall last fall. Bruce Berkowitz's: Fairholme Capital Management. The industry leader for online information for tax, accounting and finance professionals. Right? Now that's what's going on in the business so all those people writing rest in peace epitaphs for Facebook are going to have to deal with that acceleration. Tesla recalls 3,470 Model Y vehicles over loose bolts, Exclusive: Nvidia's plans for sales to Huawei imperiled if U.S. tightens Huawei curbs-draft, Reporting by Akash Sriram in Bengaluru; Editing by Arun Koyyur and Anil D'Silva, Mexico can't match U.S. incentives for proposed Tesla battery plant, minister says, Taiwan's TSMC to recruit 6,000 engineers in 2023, Exclusive: Snapchat kicks few children off app in Britain, data given to regulator shows, Exclusive news, data and analytics for financial market professionals. committed hundreds of millions of dollars to Sequoia Capital, Altimeter Capital Management and Multicoin . And so we're getting hurt like everybody else. 9/29/2022 1:05 AM. Their last reported 13F filing for Q4 2022 included $3,652,571,000 in managed 13F securities and a top 10 holdings concentration of 99.95%. Crowdfunding is the use of small amounts of capital from a large number of people to raise money or fund a business. What is the metaverse and why are billions of dollars being spent on it? WAPNER: Okay, that's a that's a big a bold call. At Meta, the number of employees is up over 3x from 25k to 85k employees in just the last four years! 15 It's our largest position in the book. I'm going to own these companies, there are a handful of select companies that are free cashflow positive that are going to be worth more in the future. . So, its with some hesitation, but significant conviction, I am sharing an open letter strongly encouraging Meta to streamline and focus its path forward. A ltimeter Growth Corp. 2, the second blank check company formed by Altimeter Capital targeting the tech sector, filed on Thursday with the SEC to raise up to $200 million in an initial public. Choose your reason below and click on the Report button. The last 10 years have been a unique time in tech and for Meta. The company has lost investor confidence as it ramped up spending and pivoted to the metaverse, the technology-focused hedge fund with a 0.1% stake said, and suggested a three-step plan. "Jitesh Ubrani: Tweet From March 3, 2023. I'm not a seller. This would double annual FCF and put FCF as a percentage of revenue more in line with Google, Microsoft, and Apple. Indias general insurers are looking to set up a larger marine insurance pool to cover the risks of transporting crude oil, edible oil, project machinery and fertiliser from the war-torn Russia-Ukraine region. But it's good to be here and and you know, while I think we we did see the normalization and multiples as a likely outcome toward the end of last year. As between each other Adhering Party and us, the amendments in the Appendices to the Protocol shall apply to each Protocol Covered Agreement to which we are a party in accordance with the terms of the Protocol and this Adherence Letter. Can it possibly be worth 100 billion? Worse, this skepticism seemed to be affirmed with a nearly-immediate and sizable miss in financial results and continued under-performance throughout 2022. In the letter, Gerstner said Altimeter Capital doesn't have demands and simply wants to engage with Meta management. But I am confident these companies like Snowflake, like Uber, like Facebook are going to be worth more than they are today at significantly more if you look out two years. With that said, we have a shortage of talent in Silicon Valley. "We think the recommendations outlined above will lead to a leaner, more productive, and more focused company a company that regains its confidence and momentum," Gerstner wrote. As you know, we are long-term shareholders. In a single quarter, they added 1.4 billion. FTX, once the third-largest centralized cryptocurrency exchange, is now in U.S. bankruptcy. Altimeter and PAR believe these experienced professionals can bring meaningful experience, objective oversight, and powerful change to United. Right. Kultura Capital Management is being structured as a hybrid fund that will focus on late-stage tech startups as well as public companies, the person said. Altimeter Capital owns approximately 0.11% of Meta. Altimeter. A securities lawyer, Brad Gerstner graduated from HBS in 2000 and joined General Catalyst. Altimeter said annual free cash flow can be doubled to $40 billion if it cut headcount by at least 20%, trimmed capital expenditure by at least $5 billion to $25 billion a year and capped. The same is true for Microsoft, right? . In fact, in the most recent quarter, they added 1.4 billion of contracted value. Trading Book: Climate Risk Scenario Analysis Close Cart 0; Reveal page search bar; ISDA fosters safe and efficient derivatives markets to facilitate effective risk management for all users of derivative products. I said IDFA which is the Apple changes right? The social media company had in June cut plans to hire engineers by at least 30%, with Zuckerberg warning employees to brace for an economic downturn. "An estimated $100B+ investment in an unknown future is super-sized and terrifying, even by Silicon Valley standards," Gerstner wrote. +Includes DocuBay and TimesPrime Membership. They're fearful about what's going to happen with rates. The stock is 51% off of its high. GERSTNER: Well, the first thing I would say is this, set aside SPAC. GERSTNER: Scott, thanks for having me. They were cratering ironically, now we're normalizing and growth stocks are down even more than they were at the start of COVID. With all of this said, we truly believe that the company should be making some of these important investments. To read full story, subscribe to ET Prime, Billed annually at Despite public skepticism at times warranted we have been supporters of the companys strategy to continuously reinvest in a product-led future and its mission to make the world more open and connected. At $20-$25B of annual capex, Meta will still be investing market leading amounts to help invent the future of AI. We don't think we're going to have 10 rate hikes and we do think there'll be an off ramp to the situation in Ukraine. Meta Platforms (META) shares jumped 6% after the tech giantannouncedbig price cuts for its virtual reality (VR) headsets. It can compound its earnings and this that and the other but I need to know can it get back to that level. Meta can get its mojo back, says Brad Gerstner, but it will have to take some hard decisions first. And we've had government intervention of the magnitude. The cumulative benefit of the recommended adjustments outlined above would increase FCF by at least $20B in 2023 ($10B from people-related expense reduction, $5B from capex reduction, and $5B from reduced metaverse spend). Of course, a company that connects nearly three billion users on phone and text must be investing in the next generation of communication. My bet is we're gonna have less this year. Data is a real-time snapshot *Data is delayed at least 15 minutes. This is a business it's grown, it's trading at 28 times free cash flow with 20% growth, that will continue to compound. Can it possibly be worth 200 billion? The Wall Street Journal reported on Thursday that Grab was in talks with Altimeter. 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I don't think Mark did a particularly good job of explaining the meta investments. It's good to see you again. Market Research. Like many other companies in a zero rate world Meta has drifted into the land of excess too many people, too many ideas, too little urgency. We want to hear from you. As you know, we have attempted to work collaboratively with the current Board to meaningfully improve governance, Board composition, and oversight. Altimeter LLC. Paul A. Reeder Global Business and Financial News, Stock Quotes, and Market Data and Analysis. So we believe not only you're going to get dramatically accelerated earnings, right, we think they're going to be a little bit more cautious about how they're spending those meta investment dollars, how they're spending dollars across the business. Conclusion A Leaner, Faster, More Successful Meta. I think we spent about an hour together. FTX founder Sam Bankman-Fried was not only a tireless fundraiser from venture capital firms including Paradigm and Sequoia Capital, but also quietly made investments in those same funds, according to two people familiar with the matter. Regrettably, our efforts have led to our complete loss of confidence in the current Board, and to our firm determination that meaningful, stockholder-directed Board change is urgently required to serve the long-term best interests of United's stockholders, customers, and employees. This company is perfectly positioned to capitalize on that they have the, the ad network to monetize it. It's interesting that now today you say we're in the neighborhood of a tradable bottom. We're withdrawing trillions off the Fed's balance sheet. Do they want to stand with me and ride that out? We know they have high EBITDA margins on the rideshare business which is dominant across the region. We'll see you soon. That stuff was being advertised on Instagram. He also asked Zuckerberg to cut down on capex and employee expenses. According to Hedge Follow, it was authored by Brad Gerstner, CEO and founder of technology investment firm Altimeter Capital. They may never get back to the levels at which they traded before. We didn't see the concerns emerging about hyperinflation about 10 to 12 rate hikes, and we certainly didn't see this tragic more unfolding on the doorstep of Europe. You know how to time markets. Can it possibly be worth a trillion? Look at another one that I know is in your book or at least it was Roblox is down 74% from its 52-week high. And so that will be rolled out in Q2 and Q3. It just launched in 150 countries, has over a billion views. About Kevin Wang. We think this is a 3X in three years even if software multiples remain at these levels near the five-year average. By any normal company or start up standard, $5 B per year would seem like an extraordinary amount. Let me tell you the bear case on Facebook, okay, the bear case on Facebook and other ad models like Google is that we're running headlong into a massive recession. As such, we think Meta company should cap its metaverse investments to no more than $5B per year with more discrete targets and measures of success, as opposed to todays much more ambitious and open-ended strategy. We hereby appoint ISDA as our agent for the limited purposes of the Protocol Agreement and accordingly we waive, and hereby release ISDA from, any rights, claims, actions or causes of action whatsoever (whether in contract, tort or otherwise) arising out of or in any way relating to this Adherence Letter or our adherence to the Protocol Agreement or any actions contemplated as being required by ISDA. That's why even the sell side consensus numbers have their growth rate accelerating, almost doubling between Q2 and Q4 of this year and we think it will accelerate even faster. Cookies collect information about your preferences and your devices and are used to make the site work as you expect it to, to understand how you interact with the site, and to show advertisements that are targeted to your interests. Brad Gerstner's Phone Number and Email Last Update. And frankly, I don't think we're gonna have hyperinflation in a world where demand is being destroyed at the rate it's currently being destroyed. I have spent over 20 years investing behind some of the worlds great founders who are helping to invent the technologies that move the world forward. This Supreme Court Case Could Redefine Crime, YellowstoneBackers Wanted to Cash OutThen the Streaming Bubble Burst, How Countries Leading on Early Years of Child Care Get It Right, Female Execs Are Exhausted, Frustrated and Heading for the Exits, More Iranian Schoolgirls Sickened in Suspected Poisoning Wave, No Major Offer Expected on Childcare in UK Budget, Oil Investors Get $128 Billion Handout as Doubts Grow About Fossil Fuels, Climate Change Is Launching a MutantSeed Space Race, This Former Factory Is Now New Taipeis Edgiest Project, What Do You Want to See in a Covid Memorial? He said the money the company is currently spending to develop VR could add up for a decade before it comes to fruition. Louis Bacon's: Moore Capital Management. The bottom line is where I wanted to start this whole interview with is you called it. We have no more confidence that you will act responsibly in the future (even with yesterday's announcement) than we have evidence that you have done so in the past. The answer to that is because people are very fearful. SPACs notched more than $70 billion so far in 2021, a new record. About Altimeter Capital Altimeter is a leading technology focused investment firm based in Silicon Valley with over $15 billion in assets from endowments, foundations, and family offices. Oct 24 (Reuters) - Facebook-parent Meta Platforms Inc (META.O) needs to streamline by cutting jobs and capital expenditure, its shareholder Altimeter Capital Management said on Monday in an open letter to Chief Executive Mark Zuckerberg. When exactly did you determine that the Board was so inadequate as to need four new directors, all at once, and without an annual meeting or a stockholder vote? As always, happy to connect with you and your team. That could in fact become a tailwind as we get to the back half of the year. Our contact information, solely for purposes of this Adherence Letter (and unrelated to the Questionnaire delivery options in the subsequent section) is: We consent to the publication of a conformed copy of this letter by ISDA and to the disclosure by ISDA of the contents of this letter. Warren Buffett's: Berkshire Hathaway. Capitalizing on the fund's VC success, Gerstner raised $450M for Altimeter Growth Corp (AGCUU), a blank check company IPO targeting the tech sector. I just happen to look at a Snowflake it's in front of me and because it's your largest position, I say can Snowflake really get back to its 52-week high of $405 a share. This is a leading internet company in Southeast Asia. 2023 Benzinga.com. Now they've told us that they're going to achieve 15% free cash flow margins this year, five years early, right, while still growing 100%. March 8, 2016 I think if you said why might these numbers have to come down if we're heading into a recession, the numbers are likely to come down. The changes for the Quest 2 begin Sunday, March 5. So first, you need to understand why did we see a deceleration of revenue because that informs why we're going to see a reacceleration in the back half of this year. After all, why not hire more people and invest in more things when the cost of capital was near zero and growth seemed unlimited? Metas core business is one of the largest and most profitable in the world with over $45 B in operating profits last year alone. But far from being a bad decision, we think the recommendations outlined above will lead to a leaner, more productive, and more focused company a company that regains its confidence and momentum. United Urgently Needs a Course Correction: United's stockholders, customers, and employees deserve better Board governance, better Board leadership, and better Board performance. We didn't think that was durable. . Conforti plans to join a new firm as a co-founder with. Chief Executive Officer "If the company were investing $1-2B per year into this project, then that confusion might not even be a problem.". You can learn more about the standards we follow in producing accurate, unbiased content in our. What is the rate of increase? It makes no sense to me, but that is the risk that you run. I have deep respect and admiration for founders that continue to grind, inspire, and invent long after the financial motivation is gone. Background [ edit] In 2008, Brad Gerstner founded Altimeter Capital in Boston, Massachusetts. b***@altimeter.com. Sincerely, Altimeter Capital Management LP Info Size ($ in 1000's) At 12/31/2022: $3,652,571 At 09/30/2022: $4,676,285 Altimeter Capital Management LP holdings changes, total fund size, and other information presented on HoldingsChannel.com was derived from Altimeter Capital Management LP 13F filings. Skip to main content. Benchmark Reform and Transition from LIBOR InfoHub, Use of Chinese Government Bonds as Margin, Updated OTC Derivatives Compliance Calendar, ISDA-Clarus RFR Adoption Indicator: January 2023. ISDA fosters safe and efficient derivatives markets to facilitate Focusing the Metaverse: the Next Generation of Communication and Collaboration. If they do it, I think the stock can be up over 50% between now and the end of the year. Altimeter Capital Chair and CEO Brad Gerstner said in an open letter to the company and CEO Mark Zuckerberg on Monday that Meta has too many employees and is moving too slowly to retain the confidence of investors. On top of that we had supply chain challenges. https://www.cnbc.com/video/2022/03/14/we-could-go-lower-before-we-go-higher-in-stocks-says-altimeter-capitalas-ceo-brad-gerstner.html. And we are confident that your long-term investments in AI and the next generation of communications will continue to drive us all forward. If you really think about what the metaverse is in the first instance, it's a better version of what you and I are doing right here. In the last 18 months, Meta stock is down 55% (compared to an average of 19% for its big-tech peers). Enjoy a 7-Day Free Trial Thru Feb 17, 2023! An estimated $100B+ investment in an unknown future is super-sized and terrifying, even by Silicon Valley standards. How big is that market? When you visit the site, Dotdash Meredith and its partners may store or retrieve information on your browser, mostly in the form of cookies. And I think they have to execute against the underlying operations in the business. Over time, we intend to share with United's stockholders our detailed analysis, which has led us to conclude, among other things, that: Link to 13F filings: SEC filings It lost $5.8 billion in the first six months of the year. This lack of focus and fitness is obscured when growth is easy but deadly when growth slows and technology changes. Right? I remember people asking that question about Amazon. Board of Directors c/o Chairman Henry L. Meyer III United Continental Holdings, Inc. . Those decisions include slashing expenditure and reducing headcount, the CEO of Altimeter Capital told Meta founder Mark Zuckerberg in an open letter. United has an Underqualified, Ineffective, and Entrenched Board: While presiding over United's stunning long-term underperformance, we believe that the incumbent Board (and a majority of the newly-expanded 15-person Board): (1) lacks sufficient leadership, expertise, and experience to challenge management and hold management accountable, to direct an operational and financial turn-around, and to maximize stockholder value; (2) has entrenched itself by implementing various mechanisms to financially penalize stockholders for making meaningful Board changes; (3) has failed to adequately align management compensation with stockholder interests; and (4) is too stale to effectively represent stockholders. Those three companies are all down that amount because it turns out that this year people got off their couch, they went out and they went to restaurants and they went in and did things instead of buy things. The cumulative benefit of the recommended adjustments outlined above would increase FCF by at least $20B in 2023 ($10B from people-related expense reduction, $5B from capex reduction, and $5B from reduced metaverse spend). Instead, the company has announced investments of $1015B per year into a metaverse project that largely includes AR / VR / immersive 3D / Horizon World and that it may take 10 years to yield results. GERSTNER: Right, it comes down fundamentally to a question Scott of whether you think we're gonna have more than eight rate increases or less. The vast majority of the capex has been an essential and high-returning investment in data centers, Nvidia GPUs and other AI resources to solidify the companys position as one of worlds leaders in AI. I don't think stocks today reflect a great price discovery about where these stocks are going to be in six months, let alone two years, but I'm also eyes wide open to the fact that we could go lower before we go higher. In addition, people are confused by what the metaverse even means. We believe that our conclusion is shared by many of United's long-suffering stockholders, customers, and 80,000+ dedicated employees. Learn the pros and cons of crowdfunding. And then take that part of the world. Right if the Fed raises rates 10 or 12 times given the demand destruction and the slowdown already underway in this country, we will be in a big recession come fall. Meta and other large companies have made it very difficult for start-ups to hire. As a result, the team hastily pivoted the company toward the metaverse including a surprise re-naming of the company to Meta. The Singaporean rideshare giant Grab is set to merge with the SPAC Altimeter Growth 1, according to a report from The Financial Times. Moreover, I am a strong supporter of founder-led companies especially when they have your successful track record of seeing the future. As you know, Altimeter Capital Management and PAR Capital Management are long-term United Continental Holdings, Inc. ("United") stockholders that together own approximately 7.1% of United's outstanding common stock. To put that in perspective, excluding your large metaverse investment, Meta is investing more in capex than Apple, Tesla, Twitter, Snap, and Uber combined! Your Reason has been Reported to the admin. In the last 18 months, Meta stock is down 55% (compared to an average of 19% for its big-tech peers). Popular Searches. So take Snowflake as an example. Meta has also been feeling pressure to improve the finances of its Reality Labs, the company's metaverseunit, which includes the VR headsets. It's also a vote of less confidence about the company's ambitions in the world of virtual and augmented reality. Samooha, a startup developing a "cross-cloud" data collaboration platform, today announced that it raised $12.5 million in a funding tranche backed by Altimeter Capital and Snowflake Ventures . Altimeter Capital Management, ISDA 2021 SBS Top-Up Protocol - Adherence. Perhaps it was the re-naming of the company to Meta that caused the world to conclude that you were spending 100% of your time on Reality Labs instead of AI or the core business. At the start of COVID on March 26th when I felt about like I do today, growth stocks were under assault. What am I supposed to think about that? I don't think the Fed is going to throw away two years' worth of work to try to avoid a recession in a election year and run us straight into the teeth of a recession while we're trying to fight a war in Europe. David Einhorn's: Greenlight Capital. Bill McColl has 25+ years of experience as a senior producer and writer for TV, radio, and digital media leading teams of anchors, reporters, and editors in creating news broadcasts, covering some of the most notable news stories of the time. [2] The firm focuses on technology investments in both public and private markets globally. The vast majority of the capex has been an essential and high-returning investment in data centers, Nvidia GPUs and other AI resources to solidify the companys position as one of worlds leaders in AI. Getting Fit Headcount Reduction / Expense Control. Updated on September 30, 2022. All quotes delayed a minimum of 15 minutes. With all of this said, we truly believe that the company should be making some of these important investments. Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We believe the future lies in AI. Meta didn't immediately respond to a request for comment. And Meta certainly has abundant financial resources to invest and / or return to shareholders. Unlock your 30 days free access to ETPrime now. We had given most of that up by middle of December. Meta said the cost of the Quest 2 will drop $70 to $429.99, while the price of the higher-end Quest Pro will be slashed to $999.99 from $1,499.99. But I do believe that this company like the others that we talked about is going to be worth more in the future supported by real free cash flow. Protocol: I have deep respect and admiration for founders that continue to grind, inspire, and invent long after the financial motivation is gone. PAR Capital Management, Inc. Do Not Sell My Personal Data/Privacy Policy. Investors in the round: 776 Capital, Altimeter Capital, BoxGroup, Dragoneer Investment Group, FirstMark, General Catalyst, Radcliff Group, ShawSpring Partners, SignalFire, The Baupost Group, Torch Capital, TQ Ventures This compensation may impact how and where listings appear. In an open letter to CEO Mark Zuckerberg on Monday, shareholder Altimeter Capital Management urged Meta Platforms Inc., the parent company of Facebook, to streamline by eliminating positions and capital expenditures. As always, happy to connect with you and your team. We also reference original research from other reputable publishers where appropriate. Altimeter Capital Management partner Chris Conforti plans to leave the investment firm, according to people with knowledge of the matter.