Meta. Altimeter Capital Management, LP ("Altimeter") is an SEC-registered investment adviser. Why 20%? Crowdfunding is the use of small amounts of capital from a large number of people to raise money or fund a business. About Altimeter Capital Over the last three years, Meta has also dramatically increased its capital expenses. PAR Capital Management, Inc. Do Not Sell My Personal Data/Privacy Policy. 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). 41,300 crore) to $25 billion (roughly Rs. 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 . David Einhorn's: Greenlight Capital. 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. effective risk management for all users of derivative products. 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. 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. Of course, a company that connects nearly three billion users on phone and text must be investing in the next generation of communication. And notably, this decline in share price mirrors the lost confidence in the company, not just the bad mood of the market. The definitions and provisions contained in the Protocol Agreement are incorporated into this Adherence Letter, which will supplement and form part of each Protocol Covered Agreement between us and each other Adhering Party. We have $130 oil and $6 gas at the pump. 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. Altimeter manages a long / short public equity fund and private growth equity funds. 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. By any normal company or start up standard, $5 B per year would seem like an extraordinary amount. It's down 32% in the last 11 months ,that ranks it in the top three of the last 20 years in terms of drawdowns. Meta and other large companies have made it very difficult for start-ups to hire. We were about 30% to 40% depending upon which basket you looked at software internet above the five-year average. But you also (sometimes) capitalize the first word of a quote. Social networking is the use of internet-based social media platforms to make connections and share various media with friends, family, colleagues, or customers. "Bloomberg Opinion" columnists offer their opinions on issues in the news. By Altimeter Capital $750M Venture Capital in Feb, 2021 VROOM E-Commerce +2 Total funding $1.2B in 10 rounds from 15 investors By Altimeter Capital $50M Series E in Sep, 2016 Wingz Networking +3 Total funding $13.7M in 4 rounds from 36 investors By Altimeter Capital $11M Series B in Jan, 2016 Altimeter Capital partner Kevin Wang led the firm's investment in cloud data platform Snowflake in 2015 in its $45 million Series C round; he sat on its board until 2020. Can it possibly be worth a trillion? These times are what try people if you dig a hole and get into the hole here at the bottom after having lost, you know, my sense is you're locking in losses that you're going to come to regret. 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. WAPNER: Man, I love how honest you are and I know our viewers do as well. So we're in the neighborhood of a tradable bottom. In fact, in the most recent quarter, they added 1.4 billion of contracted value. Your P/E ratio has fallen from 23x to 12x and now trades at less than half the average P/E of your peers. 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. Louis Bacon's: Moore Capital Management. We had given most of that up by middle of December. Data is a real-time snapshot *Data is delayed at least 15 minutes. An estimated $100B+ investment in an unknown future is super-sized and terrifying, even by Silicon Valley standards. And we are confident that your long-term investments in AI and the next generation of communications will continue to drive us all forward. 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. As you know, we have attempted to work collaboratively with the current Board to meaningfully improve governance, Board composition, and oversight. There is no doubt that doubling annual FCF will improve share price. 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. This is a region of 700 million plus people. While the increased AI investment was clearly well timed, Metas investment in the metaverse, while smaller than the AI investment, has gotten the most attention and has led to much confusion. 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. Superficial change in panicked response to rigorous scrutiny is hardly noble or a basis for stockholders to have confidence in your judgment. 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. b***@altimeter.com. No matter how a company came public in 2021, let alone December of 2021, right, they've been obliterated. There is no doubt that doubling annual FCF will improve share price. Protocol: browser. The letter is the latest sign that Meta investors are starting to express reservations about the company's recent performance. That stuff was being advertised on Instagram. Stock Radar: 19% from Budget Day! In the last 18 months, Meta stock is down 55% (compared to an average of 19% for its big-tech peers). You can learn more about the standards we follow in producing accurate, unbiased content in our. He argued that this was "one of the big reasons behind these price cuts.". March 2013 Protocol ALID: 66704. This would double annual FCF and put FCF as a percentage of revenue more in line with Google, Microsoft, and Apple. Ranked #76 out of 483 Hedge Fund Managers. "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. 15 At $20-$25B of annual capex, Meta will still be investing market leading amounts to help invent the future of AI. 2023 Benzinga.com. Meta reported in February that Reality Labs lost $13.72 billion in 2022. 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. And we've had government intervention of the magnitude. In his open letter, Gerstner asked Meta to cap its expenditure on the metaverse to $5 billion a year from the current announced investment of $10-15 billion. Global Business and Financial News, Stock Quotes, and Market Data and Analysis. You probably know you should capitalize proper nouns and the first word of every sentence. And so for us, it's about simplification, reduction of gross and making sure that you consolidate that what you own into your highest conviction ideas whether you're playing at home in your 401k or whether you're doing this professionally. Sincerely, The changes for the Quest 2 begin Sunday, March 5. 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 And so we add on a fair amount of exposures we entered this year. . "Time to Get Fit an Open Letter from Altimeter to Mark Zuckerberg (and the Meta Board of Directors).". Meta didn't immediately respond to a request for comment. And I've let the company know that, right? 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. See the Top Performing Hedge-Funds > Brad Gerstner . Altimeter Capital Management is an investment firm with offices in Menlo Park, CA, and Boston, MA. Includes DocuBay and TimesPrime Membership. I think that this is a business that is investing in the right things. This lack of focus and fitness is obscured when growth is easy but deadly when growth slows and technology changes. "New Prices for Meta Quest 2s 256GB SKU + Meta Quest Pro. 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. Chicago, IL 60606 I said IDFA which is the Apple changes right? Sign up for free newsletters and get more CNBC delivered to your inbox. These are not numbers on a spreadsheet. When you were with me in December, you said that you had picked some more of that up along with Snowflake. I expected that as the world of normalized post Omicron that we would get back to the five-year average multiple. How many increases? These are not numbers on a spreadsheet. Ultimately, Gerstner said, Meta has too many people and is spending too much on capital expenditures. Meta Platforms, which is set to report third-quarter results on Wednesday after markets close, declined to comment. Our Standards: The Thomson Reuters Trust Principles. After all, why not hire more people and invest in more things when the cost of capital was near zero and growth seemed unlimited? CAPEX Investing Aggressively and Responsibly in the Future of AI. It has 24 billion in free cash they're going to generate this year. We know they have high EBITDA margins on the rideshare business which is dominant across the region. Popular Searches. In short, Meta needs to get fit and focused. It massively distorted multiples on the way in and it's massively distorting multiples on the way out. [3] Focusing the Metaverse: the Next Generation of Communication and Collaboration. Brad Gerstner's Altimeter Capital Management has between $300 million and $400 million in assets under management, and invests almost exclusively in the services sector. By any normal company or start up standard, $5 B per year would seem like an extraordinary amount. It's a better version of Zoom. Meta changed its company name from Facebook. But what is the right amount? Copyright 2023 Bennett, Coleman & Co. Ltd. All rights reserved. Background [ edit] In 2008, Brad Gerstner founded Altimeter Capital in Boston, Massachusetts. 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 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. Sign Up. So, its with some hesitation, but significant conviction, I am sharing an open letter strongly encouraging Meta to streamline and focus its path forward. The stock is 51% off of its high. Altimeter's nominees are: Skip to main content. 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. 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. ", Medium.com. 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. With that said, we have a shortage of talent in Silicon Valley. WAPNER: We're back now with Altimeter Capital's Brad Gerstner hanging out with us at "Overtime" today, You know, we talked about the magnitude Brad by which some of these stocks have come down and I'm looking at the, listen, it's not just Meta, obviously. 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. Moreover, I am a strong supporter of founder-led companies especially when they have your successful track record of seeing the future. 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. Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. Contact. GERSTNER: No, I didn't leave it out. WAPNER: I hear you. You would simply do R&D quietly and investors would focus on the core business and the breakthroughs in AI. Tina Sharkey, CEO of SherpaFoundry; former board member of HomeAway; and We certainly our base case, as you know, was a soft landing four to five rate hikes into this year. Global Business and Financial News, Stock Quotes, and Market Data and Analysis. 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. About Altimeter Capital Altimeter is a global investment firm managing both public and private funds focused on the airline, travel, technology, internet, software, and consumer sectors. Get your daily dose of business updates on WhatsApp. 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. To read full story, subscribe to ET Prime, Billed annually at It can do great this, the business can be incredible. Of course, a company that connects nearly three billion users on phone and text must be investing in the next generation of communication. UPDATE: Altimeter Capital, PAR Capital Issue Letter to United Continental Board - United Airlines Holdings (NASDAQ:UAL) - Benzinga SPY 397.68 0.74% QQQ 293.61 0.83% BTC/USD 22299.46 5.109%. Accept. Altimeter said annual free cash flow can be doubled to $40 billion (roughly Rs. At the end of the second. And I think they have to execute against the underlying operations in the business. Privacy Policy, ISDA uses cookies to enhance your experience on our website. That's what makes markets. This is a business it's trading at 12 times free cash flow, X the meta investment and 18 times including. They're building their own ad platform, right, that can deal with this. How many dogs want to eat the dog food? c/o Chairman Henry L. Meyer III Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. 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. We do not take job reductions lightly. Enjoy a 7-Day Free Trial Thru Feb 17, 2023! The stock today hit a new low under $3. Altimeter said such huge investments "in an unknown future is super-sized and terrifying, even by Silicon Valley standards". August 2012 Protocol ALID: 66703 . This is a business it's grown, it's trading at 28 times free cash flow with 20% growth, that will continue to compound. 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. SPACs notched more than $70 billion so far in 2021, a new record. Altimeter Capital Management partner Chris Conforti plans to leave the investment firm, according to people with knowledge of the matter. See here for a complete list of exchanges and delays. 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. 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. That could in fact become a tailwind as we get to the back half of the year. Warren Buffett's: Berkshire Hathaway. "Jitesh Ubrani: Tweet From March 3, 2023. Rates are going up and we have a war. 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. We can just go through the list, Uber, Facebook, Roblox. 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. Altimeter was founded in 2008 and is headquartered out of Boston, Massachusetts. It's my job to ask you about it knowing you're not happy about it and you answered the question. . With all of this said, we truly believe that the company should be making some of these important investments. After the pandemic, hospitals are now on a strong footing. The silver lining is that unlike many companies, this popular narrative obscures the truth. 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? And, while most companies will struggle to monetize AI, we believe Meta is incredibly well positioned to leverage AI to make all of its existing products better. I hear you but look, there are, there are some people who think and it's not maybe it's not a Snowflake, but it's a you know, a basket of these kinds of names that may never get back. 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. But Meta needs to get its mojo back. The technology-focused hedge fund with a 0.1% ownership claimed that the company had lost investor confidence as it increased . 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. But as you know, in the first three months of this year, all the high-quality stocks are being destroyed as well. And, while most companies will struggle to monetize AI, we believe Meta is incredibly well positioned to leverage AI to make all of its existing products better. As a result, the team hastily pivoted the company toward the metaverse including a surprise re-naming of the company to Meta. With that said, we have a shortage of talent in Silicon Valley. We know Meta has more reach, more relevance, and more incredible opportunities for growth than almost any platform on the planet. Brad Gerstner is the Founder & Chief Executive Officer at Altimeter Capital based in Boston, Massachusetts. He joins me live. We have not made this difficult decision lightly, but after thorough, serious, and objective analysis, we feel compelled to act. If they do it, I think the stock can be up over 50% between now and the end of the year. GERSTNER: Well, first let's talk about what took Facebook down, right? The letter is the latest sign that Meta investors are starting to express reservations about the company's recent performance. Link to 13F filings: SEC filings 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. This is a leading internet company in Southeast Asia. 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. 2023 International Swaps and Derivatives Association, Inc. 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. Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more! All Rights Reserved. Brad Gerstner We dont have any demands. Board of Directors Adani Group on Thursday said US-based boutique investment firm GQG Partners has picked up equity stakes worth $1.87 billion (15,446 crore) in four listed group companies Adani Ports and Special Economic Zone, Adani Green Energy, Adani Transmission and flagship Adani Enterprises via secondary share sales. Our best guess is that maintenance capex for Meta is less than $10B annually. They are people with families and kids to support. But remember, Facebook's not just sitting there with his hands in the air saying oh my goodness, what can we do in a world where Apple wants to flex its monopolistic muscle and steal all of our advertisers. 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%. We are generally patient investors. So take Snowflake as an example. This letter constitutes, as between each other Adhering Party and us, an Adherence Letter as referred to in the Protocol. With the gains posted on March 3, Meta Platforms shares are up 54% this year. Right. Whatever the reason, that is certainly the perception. Chief Executive Officer 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. 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. You would simply do R&D quietly and investors would focus on the core business and the breakthroughs in AI. They just announced that they're going to be profit, full company profitable by 2023. In the last 18 months, Meta stock is down 55% (compared to an average of 19% for its big-tech peers). I have deep respect and admiration for founders that continue to grind, inspire, and invent long after the financial motivation is gone. 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). Over time, we intend to share with United's stockholders our detailed analysis, which has led us to conclude, among other things, that: According to Hedge Follow, it was authored by Brad Gerstner, CEO and founder of technology investment firm Altimeter Capital. The answer to that is because people are very fearful. Brad Gerstner founded the. 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. The silver lining is that unlike many companies, this popular narrative obscures the truth. It was being purchased on the Shopify platform and people were using PayPal to check out. A Division of NBCUniversal. Altimeter Growth Corp. 2 raised $400 million in a January IPO. But I think if you have a time horizon over the course of the one to three years, we see a lot of stocks in our universe that we not only think are going to end the year higher, but we think are going to be multiples higher as we look out over the next two to three years. And now we've shot right through the five-year average. 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. 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. Right. 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? Panel led by former SC judge to include NaBFID chair KV Kamath and Infys Nandan Nilekani. We agree to pay a one-time fee of $500 to ISDA at or before the submission of this Adherence Letter. Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. A securities lawyer, Brad Gerstner graduated from HBS in 2000 and joined General Catalyst. 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. 2023 CNBC LLC. About Kevin Wang. In addition, people are confused by what the metaverse even means. We want to hear from you.

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