Worse, this skepticism seemed to be affirmed with a nearly-immediate and sizable miss in financial results and continued under-performance throughout 2022. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. 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? Facebook's revenues in Q1 were lower than people expected. We're withdrawing trillions off the Fed's balance sheet. This is a company that only did 1.2 billion in revenue last year. Over the last three years, Meta has also dramatically increased its capital expenses. The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs. Altimeter and PAR believe these experienced professionals can bring meaningful experience, objective oversight, and powerful change to United. "New Prices for Meta Quest 2s 256GB SKU + Meta Quest Pro. Activist investor Brad Gerstner, founder and CEO of tech-focusedhedge fundAltimeter Capital, sent anopen letterto CEOMark Zuckerbergin October calling for a pullback in metaverse spending. And I think they have to execute against the underlying operations in the business. He said the money the company is currently spending to develop VR could add up for a decade before it comes to fruition. These are not numbers on a spreadsheet. Round: Series D Description: Ro is a telehealth startup that operates digital health clinics for men's and women's health, along with smoking cessation. Meta shares moved 6% higher following the announcement. Altimeter Capital Management LP lifted its position in shares of SEA by 128.0% during the first quarter. Global Business and Financial News, Stock Quotes, and Market Data and Analysis. 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. Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. 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. They're fearful about the war. But Meta needs to get its mojo back. We are generally patient investors. 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. In short, Meta needs to get fit and focused. It can do great this, the business can be incredible. Superficial change in panicked response to rigorous scrutiny is hardly noble or a basis for stockholders to have confidence in your judgment. All quotes delayed a minimum of 15 minutes. 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. Advertisement Gerstner, through Altimeter, manages over $15.0 billion worth of investments across private equity and venture capital. Conclusion A Leaner, Faster, More Successful Meta. Global Business and Financial News, Stock Quotes, and Market Data and Analysis. Despite public skepticism at times warranted we have been supporters After all, why not hire more people and invest in more things when the cost of capital was near zero and growth seemed unlimited? But Meta needs to get its mojo back. 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. August 2012 Protocol ALID: 66703 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). If multiples expand then you have even more upside. 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. This is a region of 700 million plus people. Amazon Is Closing Its Cashierless Stores in NYC, San Francisco and Seattle, Amazon Pauses Construction on Second Headquarters in Virginia as It Cuts Jobs, Stock Traders Are Ignoring Blaring Bond Alarms, iPhone Maker Plans $700 Million India Plant in Shift From China, Russia Is Getting Around Sanctions to Secure Supply of Key Chips for War. About Altimeter Capital Moreover, I am a strong supporter of founder-led companies especially when they have your successful track record of seeing the future. Altimeter Capital Management, ISDA 2021 SBS Top-Up Protocol - Adherence. 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. They are people with families and kids to support. Finally, Prudential PLC lifted its . However, there are few signs that VR or some of the company's metaverse apps, such as Horizon Worlds, are catching on with the public beyond early adopters. Everybody knows we've been in this company for a long time. He defied expectations and made profits on Priceline, Expedia, Uber, Twilio, and Hubspot. 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. He also asked Zuckerberg to cut down on capex and employee expenses. So were Shopify's and so were PayPal. So if you want to bet on the future of growth, Southeast Asia is one of the places you want to bet this is one of the dominant brands, dominant internet platforms, and it's got 7 billion of cash on the balance sheet. 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. Neither Altimeter, nor any of its affiliates or personnel, offers investment advisory services via the internet. 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. Last fall, Brad Gerstner from Altimeter Capital published an open letter, telling Meta it has "lost the confidence of investors" and telling the company to throw in the towel on its metaverse project. It's interesting that now today you say we're in the neighborhood of a tradable bottom. Is it all about rates at this point, especially when you're talking about the kinds of vulnerable stocks that we've really had front and center, those being tech? United Urgently Needs a Course Correction: United's stockholders, customers, and employees deserve better Board governance, better Board leadership, and better Board performance. . 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. They're fearful about what's going to happen with rates. Welcome to "Overtime.". Right? ", Medium.com. On Oct. 11, Meta announced a new high-end VR headset, the Quest Pro. I imagine they're going to be super aggressive about how they're buying back shares. It massively distorted multiples on the way in and it's massively distorting multiples on the way out. Sign up for free newsletters and get more CNBC delivered to your inbox. Get this delivered to your inbox, and more info about our products and services. Get your daily dose of business updates on WhatsApp. They are people with families and kids to support. Brad Gerstner founded the. Open letter: Altimeter Capital founder and CEO Brad Gerstner encourages Meta to cut capex by $5B+, cut headcount by 20%+, and limit metaverse R&D to $5B/year As you know, we are long-term shareholders. 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. Can it possibly be worth 200 billion? The changes for the Quest 2 begin Sunday, March 5. . But as you know, in the first three months of this year, all the high-quality stocks are being destroyed as well. I think we spent about an hour together. WAPNER: Man, I love how honest you are and I know our viewers do as well. Nov. 16, 2021 at 2:38 p.m. ISDA fosters safe and efficient derivatives markets to facilitate effective risk management for all users of derivative products. 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. Background [ edit] In 2008, Brad Gerstner founded Altimeter Capital in Boston, Massachusetts. Drew Angerer | Getty Images News | Getty Images, Meta needs to focus on its core business, not the Metaverse, says Sand Hill's Brenda Vingiello. "Jitesh Ubrani: Tweet From March 3, 2023. With that said, we have a shortage of talent in Silicon Valley. It's our largest position we're not selling but we acknowledge that it's been rough for our investors, rough for us. Over the last three years, Meta has also dramatically increased its capital expenses. In a single quarter, they added 1.4 billion. 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. But the fact of the matter is the entire market has evaporated around these types of stocks. And we are confident that your long-term investments in AI and the next generation of communications will continue to drive us all forward. Metas core business is one of the largest and most profitable in the world with over $45 B in operating profits last year alone. Worse, this skepticism seemed to be affirmed with a nearly-immediate and sizable miss in financial results and continued under-performance throughout 2022. Before we we move, what do I do with Facebook? It is a poorly kept secret in Silicon Valley that companies ranging from Google to Meta to Twitter to Uber could achieve similar levels of revenue with far fewer people. Ray Dalio's: Bridgewater Associates. To read full story, subscribe to ET Prime, Billed annually at Headquarters Location One International Place Suite 2400 Boston, Massachusetts, 02110, United States 617-310-6180 Suggest an edit Social networking is the use of internet-based social media platforms to make connections and share various media with friends, family, colleagues, or customers. Meta didn't immediately respond to a request for comment. In the last 18 months, Meta stock is down 55% (compared to an average of 19% for its big-tech peers). Meta changed its company name from Facebook. We've destroyed over $15 trillion of stock market wealth. Protocol: We want to hear from you. "If the company were investing $1-2B per year into this project, then that confusion might not even be a problem.". Following is a link to video on CNBC.com: 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. Altimeter LLC. We want to hear from you. Further strengthening our own conclusions, your seemingly desperate actions yesterday appear as a transparent and cynical attempt to maintain your official privileges and power, despite your long historical record of deficient oversight on behalf of stockholders. To put that in perspective, it merely takes the company back to mid-2021 levels of employee expense and I dont think anybody would argue that Meta wasnt sufficiently staffed in 2021 to tackle a business that looks similar to how it looks today. The last 10 years have been a unique time in tech and for Meta. To experience the full functionality of the ISDA website, it is necessary to enable Javascript in your 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. FTX, once the third-largest centralized cryptocurrency exchange, is now in U.S. bankruptcy. March 8, 2016 Altimeter Capital Management LP now owns 2,850,000 shares of the Internet company based in Singapore's stock worth $131,784,000 after purchasing an additional 1,600,000 shares during the last quarter. JavaScript in your web browser. Focusing the Metaverse: the Next Generation of Communication and Collaboration. We certainly are neither short-term traders nor activists. The technology-focused hedge fund with a 0.1% ownership claimed that the company had lost investor confidence as it increased . We also reference original research from other reputable publishers where appropriate. And Meta certainly has abundant financial resources to invest and / or return to shareholders. If the company were investing $12B per year into this project, then that confusion might not even be a problem. All of China internet down over 80%. committed hundreds of millions of dollars to Sequoia Capital, Altimeter Capital Management and Multicoin . 233 South Wacker Drive for a description of how we use cookies. Meta changed its company name from Facebook to better focus on its VR hardware and software and is spending $10 billion per year on the technology. 2023 Benzinga.com. ISDA fosters safe and efficient derivatives markets to facilitate Those decisions include slashing expenditure and reducing headcount, the CEO of Altimeter Capital told Meta founder Mark Zuckerberg in an open letter. 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. Its founder faces criminal and civil charges and goes to trial in October. The facts are startling. 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. The comp against IDFA was very difficult in Q1 and will again be difficult in q2. CAPEX Investing Aggressively and Responsibly in the Future of AI. 16,839 Followers. WAPNER: Let me lastly ask you about Grab, the SPAC deal you did, biggest SPAC deal ever of $40 billion. ", 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%. David Einhorn's: Greenlight Capital. Why 20%? At Meta, the number of employees is up over 3x from 25k to 85k employees in just the last four years! 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 Altimeter Capital is an American investment firm based in Boston, Massachusetts and Menlo Park, California. At the end of the second. Hedge Fund Manager. Menlo Park, CA 94025 (650) 549-9145 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies: . Altimeter Capital Management partner Chris Conforti plans to leave the investment firm, according to people with knowledge of the matter. 3. Do they want to stand with me and ride that out? Data is a real-time snapshot *Data is delayed at least 15 minutes. He argued that this was "one of the big reasons behind these price cuts.". Musk Made a Mess at Twitter. Prior to Octahedron, Ram was a partner and portfolio manager at Altimeter Capital, a multi-billion dollar investment firm . 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. Meta and other large companies have made it very difficult for start-ups to hire. You know how to time markets. Altimeter Capital's Brad Gerstner Issues Open Letter to Meta (NASDAQ: META) and Mark Zuckerberg. "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," Gerstner wrote in the letter. At $20-$25B of annual capex, Meta will still be investing market leading amounts to help invent the future of AI. FREE Breaking News Alerts from StreetInsider.com! Altimeter Capital Management LLC. 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. Meta reported in February that Reality Labs lost $13.72 billion in 2022. 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. 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. 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. You would simply do R&D quietly and investors would focus on the core business and the breakthroughs in AI. Ro $500.0M. United has a Clear Record of Sustained and Substantial Underperformance: Despite premier, industry-leading strategic assets such as significant scale advantages, strong brand recognition, hubs in key business markets, and membership in the largest global airline alliance United has been the worst-performing U.S. airline stock over the last five years. There are a lot of companies with speculative business models, right, that are should have never been valued where they were valued and if you don't have absolute conviction, right, they can grow their product, grow their top line and grow their earnings to match where those earlier prices were, then you need to rotate those dollars out of those companies and into companies where you have that level of conviction. 2,06,700 crore) a year and capped annual investment in the metaverse to $5 billion (roughly Rs . Altimeter Capital owns a stake of about $320 million, according to the Wall Street Journal, but that only equates with a 0.1% share of the company, according to Meta's latest filings with the. c/o Chairman Henry L. Meyer III You do, you do great work, excited for the new show and let's stay after it. They just announced that they're going to be profit, full company profitable by 2023. A Division of NBCUniversal. Remember last year they gave a guide at the beginning of the year they're going to grow at 80%. In addition, people are confused by what the metaverse even means. Learn the pros and cons of crowdfunding. The answer to that is because people are very fearful. Founder & Chief Executive Officer at Altimeter Capital . 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. GERSTNER: Right Scott so that you know I started off by saying you know we've been beaten up this year like everybody else because I was covering shorts as we approach the five-year average. 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. And we are confident that your long-term investments in AI and the next generation of communications will continue to drive us all forward. Share Your Design Ideas, New JerseysMurphy Defends $10 Billion Rainy Day Fund as States Economy Slows, This Week in Crypto: Ukraine War, Marathon Digital, FTX. Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more! Recently Active; Top Discussions; Best Content; WSO Media; BY INDUSTRY; Investment Banking Brad Gerstner, Altimeter's chair who encouraged aggressive investment in artificial intelligence, said the firm wanted to engage with Meta and did not have any demands. WAPNER: I hear you. In addition, people are confused by what the metaverse even means. In the back half, you've already lapped IDFA, in the back half of this year, the supply chain issues begin to ameliorate. Form of Letter Agreement between the Registrant, the Sponsor and each director and executive officer of the Registrant. And so, for our LPs, the bet is simple. Sign Up. So I think they got to match the investment to the revenue growth of the business. As a result, the team hastily pivoted the company toward the metaverse including a surprise re-naming of the company to Meta. So I am very unhappy because I've lost money on the deal. 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This will alert our moderators to take action. Altimeter Capital Chair and CEO Brad Gerstner, in an open letter to the company, said Meta has too many employees and is moving too slowly to retain the confidence of investors. As you know we entered the year with a big bond short, we've now covered that bond short because we don't think that it's possible for the Fed to raise rates 7,10, 12 times as some people think this year. 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%. Meta. We believe the future lies in AI. You can learn more about the standards we follow in producing accurate, unbiased content in our. This compensation may impact how and where listings appear. United Continental Holdings, Inc. 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? It added that VR is "a powerful social platform and creative technology, and the more people with access to it, the better. And, while that ultimately is an important long-term measure of success for all of Metas stakeholders, it would be imprudent to make short-term bad decisions just to improve the share price. To put that in perspective, it merely takes the company back to mid-2021 levels of employee expense and I dont think anybody would argue that Meta wasnt sufficiently staffed in 2021 to tackle a business that looks similar to how it looks today. See the Top Performing Hedge-Funds > Brad Gerstner . Experience Your Economic Times Newspaper, The Digital Way! To put it in perspective, Roblox was a couple percent position for us, right, and Snowflake was a 30% position for us. We know Meta has more reach, more relevance, and more incredible opportunities for growth than almost any platform on the planet. Board of Directors c/o Chairman Henry L. Meyer III United Continental Holdings, Inc. . Usually you don't capitalize after a colon, but there are exceptions. Activist investor Brad Gerstner, founder and CEO of tech-focused hedge fund Altimeter Capital, sent an open letter to CEO Mark Zuckerberg in October calling for a pullback in metaverse spending. 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. With that said, we have a shortage of talent in Silicon Valley. Our six nominees have the necessary skills, leadership abilities, and relevant experience to catalyze a United course change and to help the Company realize its immense potential. There is no doubt that doubling annual FCF will improve share price. . Right. As you know, we are long-term shareholders. Board of Directors 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. I don't think Mark did a particularly good job of explaining the meta investments. We also believe Metas investment in AI will lead to exciting and important new products that can be cross-sold to billions of customers. I'll acknowledge that Roblox and other names like that are in a much smaller, are in a much more perilous position in this market because they're not generating as much free cash as some of these other companies that I already mentioned. Altimeter Capital Management, LP ("Altimeter") is an SEC-registered investment adviser. At the start of COVID on March 26th when I felt about like I do today, growth stocks were under assault. Brad Gerstner is the Founder & Chief Executive Officer at Altimeter Capital based in Boston, Massachusetts. We were about 30% to 40% depending upon which basket you looked at software internet above the five-year average. WAPNER: I know I know you're not happy about it. Time to Get Fit an Open Letter from Altimeter to Mark Zuckerberg (and the Meta Board of Directors) | by Brad Gerstner @altcap | Medium 500 Apologies, but something went wrong on our end.. This letter constitutes, as between each other Adhering Party and us, an Adherence Letter as referred to in the Protocol. By any normal company or start up standard, $5 B per year would seem like an extraordinary amount. 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. Brad Gerstner So we've taken up our exposure, we've consolidated behind our five or six best ideas, we don't run leverage and so the bet for our LPs, I'm the largest LP in the fund. I think, or inflation, I think they're behind the curve on recession. HONG KONG (AP) Southeast Asia's largest ride-hailing company, Grab Holdings, said Tuesday that it plans to merge with U.S.-based Altimeter Growth Capital in a deal that would value it at . BRAD GERSTNER: Hey, Scott, thanks for having me. Bill Ackman's: Pershing Square Capital Management. That was our baseline that we were going to have a relatively soft landing, three to four rate hikes. What's going to be the inflation print in April? 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 annual investment in the metaverse to $5 billion instead of the current $10 billion.