c/o Chairman Henry L. Meyer III We do not take job reductions lightly. That was our baseline that we were going to have a relatively soft landing, three to four rate hikes. 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). 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. In Q1 of 2021, everybody was sitting on their couch. Bruce Berkowitz's: Fairholme Capital Management. Meta shares moved 6% higher following the announcement. Tina Sharkey, CEO of SherpaFoundry; former board member of HomeAway; and Warren Buffett's: Berkshire Hathaway. In addition, people are confused by what the metaverse even means. ISDA fosters safe and efficient derivatives markets to facilitate It lost $5.8 billion in the first six months of the year. Finally, Prudential PLC lifted its . Altimeter Capital Management LLC. Portfolio Gain +273.45%. If Meta was able to control those costs, he said, then it could double its free cash flow and improve its share price. ISDA 2021 SBS Top-Up Protocol, Adhering Organization: At the end of the second. See here for a complete list of exchanges and delays. +Includes DocuBay and TimesPrime Membership. I think that this is a business that is investing in the right things. Market Research. In the last 18 months, Meta stock is down 55% (compared to an average of 19% for its big-tech peers). 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. With SNOW currently trading at $242, that stake is now worth $8.8 billion. Crowdfunding is the use of small amounts of capital from a large number of people to raise money or fund a business. 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. . Altimeter Capital. GERSTNER: Without a doubt the single biggest lever on growth multiples is rates. 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. It can do that by making. I have been told that Amazon spent far less in total to build AWS. What is the Fed going to do? About Kevin Wang. 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. 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. 41,300 crore) to $25 billion (roughly Rs. This is a region of 700 million plus people. Altimeter Capital owns about 2.46 million Meta shares. Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. Right. Usually you don't capitalize after a colon, but there are exceptions. It's interesting that now today you say we're in the neighborhood of a tradable bottom. Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more! 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. 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. Sign Up. 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.. JavaScript in your web browser. 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. We can just go through the list, Uber, Facebook, Roblox. Dear Chairman Meyer and Board Members: How big are the margins, ultimately Snowflake will be worth a lot more because there is almost endless demand for the product and this is a business that is highly profitable. It makes no sense to me, but that is the risk that you run. 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. An estimated $100B+ investment in an unknown future is super-sized and terrifying, even by Silicon Valley standards. 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. I think, or inflation, I think they're behind the curve on recession. 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. 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. Board of Directors We know Meta has more reach, more relevance, and more incredible opportunities for growth than almost any platform on the planet. Copyright 2023 Bennett, Coleman & Co. Ltd. All rights reserved. Brenda Yester Baty, Head of Strategic Initiatives at Lennar Corp.; former SVP Revenue Management at Carnival Cruise Lines. 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. You would simply do R&D quietly and investors would focus on the core business and the breakthroughs in AI. We want to hear from you. But Meta needs to get its mojo back. 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. The conventional wisdom press and investor is that the core business hit a wall last fall. 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. 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. Capitalizing on the fund's VC success, Gerstner raised $450M for Altimeter Growth Corp (AGCUU), a blank check company IPO targeting the tech sector. So these are different order of magnitude bets. David Einhorn's: Greenlight Capital. Moreover, I am a strong supporter of founder-led companies especially when they have your successful track record of seeing the future. The move comes amid a decline in Meta's VR shipments and pressure from activist shareholders to improve the financial picture of its metaverse division. Getting Fit Headcount Reduction / Expense Control. We simply wanted to further engage and continue sharing our thoughts as an interested shareholder. So I think they got to match the investment to the revenue growth of the business. It has 24 billion in free cash they're going to generate this year. 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. 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 . So you know, when I look at what's going on in the business and I try to distill it from the noise, which is what has made us good for 20 years, not following the crowd, not panicking, but really looking at the business. Days Trial 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. Altimeter said annual free cash flow can be doubled to $40 billion (roughly Rs. Stock Radar: 19% from Budget Day! GERSTNER: Scott, thanks for having me. GERSTNER: Well, the first thing I would say is this, set aside SPAC. 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. Its founder faces criminal and civil charges and goes to trial in October. How many increases? Altimeter Capital Management, LP Buys Opendoor Technologies Inc, Toast Inc, Duolingo Inc, Sells . "Meta Reports Fourth Quarter and Full Year 2022 Results," Page 10. On top of that we had supply chain challenges. With all of this said, we truly believe that the company should be making some of these important investments. The company explained that its goal has always been to "create hardware that's affordable for as many people as possible to take advantage of all that VR has to offer." At the start of COVID on March 26th when I felt about like I do today, growth stocks were under assault. We also reference original research from other reputable publishers where appropriate. The Meta investor recommended a plan to get the company's "mojo back," including reducing headcount expenses by 20% and limiting the company's pricey investments in "metaverse" technology VR software and hardware to no more than $5 billion per year. They were cratering ironically, now we're normalizing and growth stocks are down even more than they were at the start of COVID. It can compound its earnings and this that and the other but I need to know can it get back to that level. 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. That could in fact become a tailwind as we get to the back half of the year. 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. Altimeter Capital Management, LP A Division of NBCUniversal. Altimeter Capital Management partner Chris Conforti plans to leave the investment firm, according to people with knowledge of the matter. So take Snowflake as an example. You got a lot of this right but multiples have come down a heck of a lot to this point. Consumer confidence is plummeting. Gordon Bethune, former CEO of Continental Airlines; board member of Honeywell, Prudential Financial, and Sprint; But Meta needs to get its mojo back. Every company I talked to is tightening its belts. Ultimately, we and the Board necessarily must share the same objective: maximizing long-term value creation for United's stockholders, customers, and employees. He said the money the company is currently spending to develop VR could add up for a decade before it comes to fruition. This compensation may impact how and where listings appear. What is the rate of increase? The bet . Instead, they grew at 106%. 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 How big is that market? At Meta, the number of employees is up over 3x from 25k to 85k employees in just the last four years! And notably, this decline in share price mirrors the lost confidence in the company, not just the bad mood of the market. GERSTNER: Scott, I love that you asked the question. This would double annual FCF and put FCF as a percentage of revenue more in line with Google, Microsoft, and Apple. I think they have to take a look at their capital allocation plan. 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. 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. . Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. Metas core business is one of the largest and most profitable in the world with over $45 B in operating profits last year alone. We believe in this team. We also believe Metas investment in AI will lead to exciting and important new products that can be cross-sold to billions of customers. 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. It said Grab is expected to raise between. Get this delivered to your inbox, and more info about our products and services. Musk Made a Mess at Twitter. WAPNER: I know I know you're not happy about it. It's good to see you again. The letter is the latest sign that Meta investors are starting to express reservations about the company's recent performance. CAPEX Investing Aggressively and Responsibly in the Future of AI. Can they maintain their growth momentum? Altimeter Capital Management, LP ("Altimeter") is an SEC-registered investment adviser. 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. 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). Can it possibly be worth 200 billion? 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). Following is the unofficial transcript of a CNBC exclusive interview with Altimeter Capital Founder & CEO Brad Gerstner on CNBC's "Closing Bell: Overtime" (M-F, 4PM-5PM ET) today, Monday, March 14th for the premiere. 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. Get this delivered to your inbox, and more info about our products and services. If the deal goes through, it. 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. If you look at the company, it's now trading at $5 billion enterprise value. "An estimated $100B+ investment in an unknown future is super-sized and terrifying, even by Silicon Valley standards," Gerstner wrote. These are not numbers on a spreadsheet. Comprender el funcionamiento social, poltico, econmico, cultural y natural de la sociedad a fin de reflexionar, hacer propuestas y asumir compromiso en torno a las polticas de desarrollo nacional, local y regional en el mbito del respeto de los derechos humanos, la integracin econmica y la convivencia social, bajo una concepcin de desarrollo humano sostenible. Altimeter Capital is in talks with ride-hailing company Grab to bring the company public in a $40 billion deal, according to a report from The Wall Street Journal. Frankly, if I was Sea Limited, if I was Uber, I might be looking at consolidating the business. 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. Days Trial. 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. How many dogs want to eat the dog food? What Does Metaverse Mean and How Does This Virtual World Work? Global Business and Financial News, Stock Quotes, and Market Data and Analysis. Are you as optimistic today as you were in months past? We didn't think that was durable. CAPEX Investing Aggressively and Responsibly in the Future of AI. Welcome to "Overtime.". Meta changed its company name from Facebook. WAPNER: I want to take a look at the stock in "Overtime" here because I think you're moving in I'm looking at what looks to be a higher move as we're having this conversation and that brings me frankly, now to Facebook. ", 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%. Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. We also believe Metas investment in AI will lead to exciting and important new products that can be cross-sold to billions of customers. A Division of NBCUniversal. We certainly our base case, as you know, was a soft landing four to five rate hikes into this year. Altimeter Growth Corp. 2 raised $400 million in a January IPO. In fact, in the most recent quarter, they added 1.4 billion of contracted value. Altimeter Capital Management, LLC. It takes effect in 2023. Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts. On Oct. 11, Meta announced a new high-end VR headset, the Quest Pro. Learn the pros and cons of crowdfunding. Our best guess is that maintenance capex for Meta is less than $10B annually. 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. Of course, a company that connects nearly three billion users on phone and text must be investing in the next generation of communication. Our Standards: The Thomson Reuters Trust Principles. Brad Gerstner's Phone Number and Email Last Update. He defied expectations and made profits on Priceline, Expedia, Uber, Twilio, and Hubspot. And we are confident that your long-term investments in AI and the next generation of communications will continue to drive us all forward. Today, the cost of capital has radically changed, and so has Metas growth rate. Privacy Policy, ISDA uses cookies to enhance your experience on our website. Altimeter Feb 2021 - Present2 years 2 months New York, United States Chris is a Partner at Altimeter on the private investing team where he focuses on investing in iconic late stage technology. Altimeter LLC. The silver lining is that unlike many companies, this popular narrative obscures the truth. Altimeter is based in California and has about $16 billion in . As you know, we have attempted to work collaboratively with the current Board to meaningfully improve governance, Board composition, and oversight. In short, Meta needs to get fit and focused. This will alert our moderators to take action. 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. PAR Capital Management, Inc. Do Not Sell My Personal Data/Privacy Policy. 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. 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. Or it's well over a trillion, Microsoft 3 trillion. I have deep respect and admiration for founders that continue to grind, inspire, and invent long after the financial motivation is gone. We have $130 oil and $6 gas at the pump. Meta. Meta Platforms, which is set to report third-quarter results on Wednesday after markets close, declined to comment. And so that will be rolled out in Q2 and Q3. I think we spent about an hour together. 2023 CNBC LLC. effective risk management for all users of derivative products. Bill Ackman's: Pershing Square Capital Management. A letter addressed to Zuckerberg and the board of directors was published on Oct. 24. The bottom line is where I wanted to start this whole interview with is you called it. Meta and other large companies have made it very difficult for start-ups to hire. 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. Altimeter Capital Management is an investment firm that operates within the technology sector. 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. 3,30,700 crore) if it cut headcount by at least 20 percent, trimmed capital expenditure by at least $5 billion (roughly Rs. 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Altimeter Capital owns approximately 0.11% of Meta. See here for a complete list of exchanges and delays. 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. I think the only debate is what is the multiple going to be in three months, in six months, in nine months. WAPNER: I hear you. So listen, I'm not happy about it. By any normal company or start up standard, $5 B per year would seem like an extraordinary amount. Brad, thank you. Rates are going up and we have a war. GERSTNER: No, I didn't leave it out. This is expected to facilitate trade as the West ratchets up sanctions on Russia. This lack of focus and fitness is obscured when growth is easy but deadly when growth slows and technology changes. Will His AI Plans Be Any Different? Facebook's revenues in Q1 were lower than people expected. 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