Over the last three years, Meta has also dramatically increased its capital expenses. We have little doubt investors and others would happily support scaling up these investments as the ROI becomes more tangible even if still long-term. The silver lining is that unlike many companies, this popular narrative obscures the truth. GERSTNER: Without a doubt the single biggest lever on growth multiples is rates. Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. And notably, this decline in share price mirrors the lost confidence in the company, not just the bad mood of the market. They were buying goods, soccer balls on DICK's Sporting Goods and candles on Williams Sonoma. 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. 2499 1749, Monthly Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. Meta Platforms (META) shares jumped 6% after the tech giantannouncedbig price cuts for its virtual reality (VR) headsets. I think they have to take a look at their capital allocation plan. I have deep respect and admiration for founders that continue to grind, inspire, and invent long after the financial motivation is gone. 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. He left GC and became co-CEO of NLG, an early online travel start-up purchased in part by IAC.He co-founded Openlist.com, a local search start up that was self-funded and sold to Marchex (Nasdaq: MCHX);He was a partner at PAR Capital, a multi-billion hedge. But listen, there's massive uncertainty in the world. Paul A. Reeder Moreover, I am a strong supporter of founder-led companies especially when they have your successful track record of seeing the future. Even excluding its large metaverse investment, Meta has gone from $15B in annual capex in 2018, 2019, and 2020 to $30B in annual capex in 2022. . Altimeter Capital Management is a hedge fund with 17 clients and discretionary assets under management (AUM) of $17,950,309,162 (Form ADV from 2022-05-27). Limit investment in metaverse / Reality Labs to no more than $5B per year. This company is perfectly positioned to capitalize on that they have the, the ad network to monetize it. Why didn't you buy, you know, Uber at 28 bucks a share? We want to hear from you. WAPNER: Man, I love how honest you are and I know our viewers do as well. And so that will be rolled out in Q2 and Q3. The Wall Street Journal reported on Thursday that Grab was in talks with Altimeter. We believe the future lies in AI. What is the metaverse and why are billions of dollars being spent on it? Login 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. According to Hedge Follow, it was authored by Brad Gerstner, CEO and founder of technology investment firm Altimeter Capital. He said the money the company is currently spending to develop VR could add up for a decade before it comes to fruition. Learn the pros and cons of crowdfunding. Meta Platforms, which is set to report third-quarter results on Wednesday after markets close, declined to comment. With that said, we have a shortage of talent in Silicon Valley. Brad Gerstner, the CEO of Altimeter Capital and a Meta investor, wrote in an open letter to the company in October that Meta needs to "get fit and focused," and he was critical of the hefty. Email. We can just go through the list, Uber, Facebook, Roblox. In the back half, you've already lapped IDFA, in the back half of this year, the supply chain issues begin to ameliorate. Meta shareholder Altimeter urges Facebook parent to cut down jobs, expenses 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 Division of NBCUniversal. Rodney O'Neal, former CEO of Delphi Automotive; former board member of Delphi Automotive, Sprint, and Goodyear; 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. 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. Altimeter Growth Corp., the blank-check company merging with internet giant Grab Holdings Inc., is hovering just a few cents above its record low after cratering 28% since the deal was unveiled in . Roblox Raises $520M led by Altimeter Capital and Dragoneer Investment Welcome to "Overtime.". Altimeter Partner Chris Conforti to Leave the Investment Firm Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more! Top 10 Stocks Held By Altimeter Capital Management LP AGCUU went public at $10 on Oct. 1, and closed Tuesday at $11.80. In fact, we believe that augmented and artificial intelligence has the potential to drive more economic productivity than the internet itself. Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts. PAR Capital Management, Inc. Do Not Sell My Personal Data/Privacy Policy. Altimeter Capital Management is an investment firm with offices in Menlo Park, CA, and Boston, MA. Reels, which is a massive product is going to increase its monetization between now and the end of the year. Brad Gerstner, Founder and CEO of Altimeter Capital; former board member of Orbitz Worldwide; You probably know you should capitalize proper nouns and the first word of every sentence. In a single quarter, they added 1.4 billion. The conventional wisdom press and investor is that the core business hit a wall last fall. To put that in perspective, excluding your large metaverse investment, Meta is investing more in capex than Apple, Tesla, Twitter, Snap, and Uber combined! But Meta needs to get its mojo back. Altimeter Capital Management, LP 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. 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. The facts are startling. Ultimately, we and the Board necessarily must share the same objective: maximizing long-term value creation for United's stockholders, customers, and employees. Link to 13F filings: SEC filings Altimeter Capital Management, LP ("Altimeter") is an SEC-registered investment adviser. You would simply do R&D quietly and investors would focus on the core business and the breakthroughs in AI. Brad Gerstner's Phone Number and Email Last Update. To put it in perspective, Roblox was a couple percent position for us, right, and Snowflake was a 30% position for us. Got a confidential news tip? "Bloomberg Opinion" columnists offer their opinions on issues in the news. Its founder faces criminal and civil charges and goes to trial in October. 3. Congrats on the new show. GERSTNER: So, Scott that you know the top six names in our book are all companies that we believe are, you know, both accelerating, expanding margins, expanding free cash flow margins, right, and that are critically important and will be worth more in the future. You know how to time markets. To accomplish this goal, we recommend a three step plan that will double FCF to $40 B per year and focus the companys teams and investments: Reduce headcount expense by at least 20%;Reduce annual capex by at least $5 B from $30B to $25B; andLimit investment in metaverse / Reality Labs to no more than $5B per year. And I've let the company know that, right? We are confident that these employees will find replacement jobs and quickly be back to work on important inventions that will move us all forward. Now you didn't address any of the iOS changes and the revenue hit that Facebook is is assuming from that and those are legitimate changes. March 8, 2016 Brad Gerstner Wiki: Facts about the CEO OF Altimeter Capital Meta Platforms CEO Mark Zuckerberg speaks about the Facebook News feature at the Paley Center For Media in New York on Oct. 25, 2019. 2,06,700 crore) a year and capped annual investment in the metaverse to $5 billion (roughly Rs . Meta has also been feeling pressure to improve the finances of its Reality Labs, the company's metaverseunit, which includes the VR headsets. They may never get back to the levels at which they traded before. Altimeter SPAC Taking Grab Public | PYMNTS.com As you know, we are long-term shareholders. Altimeter manages a long / short public equity fund and private growth equity funds. Panel led by former SC judge to include NaBFID chair KV Kamath and Infys Nandan Nilekani. Altimeter. Bill Ackman's: Pershing Square Capital Management. And as a result, you know, last year we held up better than most because we own high-quality stocks, and we were short lower quality stocks. 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. Finally, Prudential PLC lifted its . This is a hard game. We do not take job reductions lightly. Days Trial. 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. As always, happy to connect with you and your team. Brad Gerstner's Altimeter Capital has an $8B profit on Snowflake. A new ISDA fosters safe and efficient derivatives markets to facilitate effective risk management for all users of derivative products. Or it's well over a trillion, Microsoft 3 trillion. There isnt a day that goes by where I dont find myself using Metas products to communicate, to connect, and to entertain still amazed at the power of these services. Meta investor Altimeter Capital urges Mark Zuckerberg to slash jobs He also asked Zuckerberg to cut down on capex and employee expenses. Brad, thank you. So, it doesn't surprise me at all that buyers are on the sidelines and that sellers and short sellers are having a field day with stocks. The bottom line is where I wanted to start this whole interview with is you called it. Published Jan 7, 2021 6:11AM EST A ltimeter Growth Corp. 2, the second blank check company formed by Altimeter Capital targeting the tech sector, raised $400 million by offering 40 million. A newly launched P2E adventure game, Chronos: Dawn of Tie, has introduced a series of brand-new PvP elimination tournaments.Last month, the whimsical battle game organized its beta stage featuring selected players. So I think they got to match the investment to the revenue growth of the business. Altimeter said annual free cash flow can be doubled to $40 billion (roughly Rs. We understand that the Protocol is designed to amend only those Protocol Covered Agreements between two Adhering Parties that were previously amended pursuant to the terms of the August 2012 Protocol, the March 2013 Protocol or both. We worked hard on the deal and the timing was horrific. Rapid mobile adoption helped market leaders blaze through the s-curve with astounding growth rates and a historically low cost of capital made investments in people and things the rational economic decision. Metas core business is one of the largest and most profitable in the world with over $45 B in operating profits last year alone. Time to Get Fit an Open Letter from Altimeter to Mark Zuckerberg (and 3,30,700 crore) if it cut headcount by at least 20 percent, trimmed capital expenditure by at least $5 billion (roughly Rs. How many increases? We dont have any demands. Some companies require tremendous capex investment to maintain their existing business. Even excluding its large metaverse investment, Meta has gone from $15B in annual capex in 2018, 2019, and 2020 to $30B in annual capex in 2022. With the gains posted on March 3, Meta Platforms shares are up 54% this year. PDF QUARTERLY LETTER - Hayden Capital effective risk management for all users of derivative products. Q1 2021: 13 Largest Global Startup Funding Rounds - AlleyWatch United Continental Holdings, Inc. To read full story, subscribe to ET Prime, Billed annually at The Meta investor recommends a plan to get the company's "mojo back.". Sign Up. It can do great this, the business can be incredible. WAPNER: I know I know you're not happy about it. 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. 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. Investopedia does not include all offers available in the marketplace. ISDA fosters safe and efficient derivatives markets to facilitate Gordon Bethune, former CEO of Continental Airlines; board member of Honeywell, Prudential Financial, and Sprint; GERSTNER: Scott, I love that you asked the question. Recently Active; Top Discussions; Best Content; WSO Media; BY INDUSTRY; Investment Banking The facts are startling. The letter is the latest sign that Meta investors are starting to express reservations about the company's recent performance. It can compound its earnings and this that and the other but I need to know can it get back to that level. Steven Cohen's: Point72 Asset Management. 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. And so we're getting hurt like everybody else. Altimeter Capital Management, ISDA 2021 SBS Top-Up Protocol - Adherence. From Grand Teton to Universal Speech Translator to Make-A-Video, we are witnessing a Cambrian moment in AI, and Meta is no doubt well positioned to help invent and monetize that future. committed hundreds of millions of dollars to Sequoia Capital, Altimeter Capital Management and Multicoin . ISDA 2021 SBS Top-Up Protocol, Adhering Organization: Includes DocuBay and TimesPrime Membership. Techmeme: Open letter: Altimeter Capital founder and CEO Brad Gerstner Meta needs to re-build confidence with investors, employees and the tech community in order to attract, inspire, and retain the best people in the world. This is a region of 700 million plus people. 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. Altimeter Capital Management is a technology focused investment firm based in Menlo Park, CA and Boston, MA. We think both of those are solvable. I mean, we're talking about billions of dollars in revenue but you left that out. All Rights Reserved. At the start of COVID on March 26th when I felt about like I do today, growth stocks were under assault. For reprint rights: Continue reading with one of these options: Login to get access to some exclusive stories, Get access to exclusive stories, expert opinions &, Valid only with UPI, Credit & Debit Cards Autopay, Inciting hatred against a certain community, 15 Every company I talked to is tightening its belts. Do they want to stand with me and ride that out? In preparation for its first-ever mass tournament, Chronos will feature a fantasy-theme RPG with the potential to earn prizes and a chance to win based on the classes of playable . Neither Altimeter, nor any of its affiliates or personnel, offers investment advisory services via the internet. FTX, once the third-largest centralized cryptocurrency exchange, is now in U.S. bankruptcy. 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. I don't think there's any chance that the Fed is going to raise rates 10 times this year. Days Trial Headquarters Location One International Place Suite 2400 Boston, Massachusetts, 02110, United States 617-310-6180 Suggest an edit And we are confident that your long-term investments in AI and the next generation of communications will continue to drive us all forward. We simply wanted to further engage and continue sharing our thoughts as an interested shareholder. 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. ", Jitesh Ubrani of market research firm IDCpointed outthat Meta's year-over-year VR shipments plunged 93% in the fourth quarter, while those of Pico from rival ByteDance rose 110%. The comp against IDFA was very difficult in Q1 and will again be difficult in q2. SCOTT WAPNER: Now let's move to an exclusive interview with a marquee investor who saw the destruction in tech coming, Altimeter Capital's founder and CEO Brad Gerstner. 2023 CNBC LLC. With all of that said, we believe the company can responsibly and reasonably reign in capex while continuing to invest aggressively in AI and other critical areas. And what is going to be the resolution to the situation in the Ukraine? WAPNER: Speaking of going higher up, you see what interest rates are doing today after sitting in a tight spot, they've started to move to 11. 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 It massively distorted multiples on the way in and it's massively distorting multiples on the way out. He said a 20% cut in employee spending would take Meta back to the levels of staffing it had last year and argued that the company can't spend as it used to since the cost of capital and interest rates have risen recently. At $20-$25B of annual capex, Meta will still be investing market leading amounts to help invent the future of AI. Portfolio Gain +273.45%. 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. We believe in this team. "Jitesh Ubrani: Tweet From March 3, 2023. "Meta Reports Fourth Quarter and Full Year 2022 Results," Page 10. 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. Musk Made a Mess at Twitter. Altimeter Capital Management, - GuruFocus.com It's interesting that now today you say we're in the neighborhood of a tradable bottom. 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). I've got some people including a guy coming up in a little while Mike Wilson who suggested at this point bonds may be a better deal than stocks. Altimeter's second tech SPAC Altimeter Growth Corp. 2 files - Nasdaq WAPNER: Okay, that's a that's a big a bold call. We were wrong. Brenda Yester Baty, Head of Strategic Initiatives at Lennar Corp.; former SVP Revenue Management at Carnival Cruise Lines. "Time to Get Fit an Open Letter from Altimeter to Mark Zuckerberg (and the Meta Board of Directors).". But admittedly, you know, nights like tonight we'll we'll get we'll catch a little less sleep. Our best guess is that maintenance capex for Meta is less than $10B annually. It's been a half century since Australia and China established formal relations, but neither side is really celebrating. The average tech IPOs down almost 50% from last year, SPACs much worse, direct list bad, all stocks that were taken public last year now it's clear were overvalued relative to where the world is trading them today. Conforti plans to join a new firm as a co-founder with former Whale Rock Capital Management partner Kristov Paulus, said one of the people, who asked not to be identified because the information is private. The conventional wisdom press and investor is that the core business hit a wall last fall. QUARTERLY LETTER 2022 | Vol.1 1345 AVENUE OF THE AMERICA S 33RDFLOOR NEW YORK, NY 10105 HAYDENCAPITAL.COM HAYDEN CAPITAL 2 May 20, 2022 Dear Partners and Friends, The last six months have been extremely painful - by far, the worst period since we started Hayden. And I appreciate you being with me on the very first "Overtime" show. I think we spent about an hour together. Meta needs to regain the confidence of investors, the public and employees, Altimeter Capital Management CEO Brad Gerstner said Monday in an open letterto Zuckerberg. Kevin Wang - Forbes Investors Who Put $2 Billion Into FTX Face Scrutiny, Too Moreover, Meta has industry leading capabilities in key future technologies like artificial intelligence and immersive 3d that will help drive new products and future growth. Grab Holdings Looking to Go Public Through SPAC Merger 9/29/2022 1:05 AM. We think this is a 3X in three years even if software multiples remain at these levels near the five-year average. The bet . 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. In the last 18 months, Meta stock is down 55% (compared to an average of 19% for its big-tech peers). United Urgently Needs a Course Correction: United's stockholders, customers, and employees deserve better Board governance, better Board leadership, and better Board performance. Altimeter Capital Management, LLC. PLAN, Access the exclusive Economic Times stories, Editorial and Expert opinion, 90 Days Prime access worth Rs999 unlocked for you, Exclusive Economic Times Stories, Editorials & Expert opinion across 20+ sectors, Stock analysis. 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. 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? And for us, we consolidate behind the things we have deep conviction in with confidence they're going to be worth more in the future. 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. Chicago, IL 60606 Altimeter Capital Management partner Chris Conforti plans to leave the investment firm, according to people with knowledge of the matter. Whether it is making Whatsapp more seamless or making content and ads more useful on Instagram, Reels and Facebook AI is a globally scarce resource that already is driving noticeable improvements for Metas three billion customers and advertisers. Based on yesterday's announcement, it seems the Board now agrees that for many years it operated with a suboptimal composition. Global Business and Financial News, Stock Quotes, and Market Data and Analysis. Altimeter Capital Company Profile | Management and Employees List Home : Altimeter They were cratering ironically, now we're normalizing and growth stocks are down even more than they were at the start of COVID. I don't think Mark did a particularly good job of explaining the meta investments. 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. "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. FTX's list of investors spans powerful and well-known investment firms: NEA, IVP, Iconiq Capital, Third Point Ventures, Tiger Global, Altimeter Capital Management, Lux Capital, Mayfield,. The Digital Markets Act (DMA) is a groundbreaking European law designed to rein in the power of the gatekeepers of the digital economy. After several years of growing tensions, the potential for a reset under Australia's new Labor government is in question as trade sanctions remain and diplomatic disputes persist. WAPNER: I wanna, I want to take a break and get into some of those names of all four but before I do that lastly, you mentioned very interestingly that you've taken your bond short off. effective risk management for all users of derivative products. By any normal company or start up standard, $5 B per year would seem like an extraordinary amount. And so we add on a fair amount of exposures we entered this year. That could in fact become a tailwind as we get to the back half of the year. To experience the full functionality of the ISDA website, it is necessary to enable Javascript in your 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.