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. Your Reason has been Reported to the admin. 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. We have no stimulus checks. 2550 Sand Hill Road, Suite 150. You do, you do great work, excited for the new show and let's stay after it. What is the Fed going to do? Days Trial. 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. By any normal company or start up standard, $5 B per year would seem like an extraordinary amount. 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. 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. I think, or inflation, I think they're behind the curve on recession. ISDA 2021 SBS Top-Up Protocol, Adhering Organization: A Division of NBCUniversal. With that said, we have a shortage of talent in Silicon Valley. Altimeter said such huge investments "in an unknown future is super-sized and terrifying, even by Silicon Valley standards". Portfolio Gain +273.45%. We simply wanted to further engage and continue sharing our thoughts as an interested shareholder. 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. Altimeter Capital Management, LP Experience Your Economic Times Newspaper, The Digital Way! They're fearful about the war. Unlock your 30 days free access to ETPrime now. 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. Wall Street closes sharply higher, notches weekly gains as Treasury yields ease, Morgan Stanley reaffirms Top Pick on Apple (AAPL) stock, sees catalyst-rich event path, Amazon (AMZN) pausing construction on second HQ in Virginia - Bloomberg, Broadcom Q1 results & guidance beat estimates; analysts praise 'stellar' execution, Dell reverses early gains on soft outlook; analyst reactions mixed, Embark Trucks (EMBK) to reduce workforce, explore strategic alternatives including liquidation, Ford Motor (F) Declares $0.65 Special Dividend; 4.5% Yield, Crypto firms behind Tether used falsified documents to maintain banking system access - WSJ, Altamira Therapeutics (CYTO) Reports Study Showing Bentrio's Superior Nasal Residence Time and Rheological Properties, Desktop Metal (DM) jumps on chatter of deal with Apple, Midday movers: C3 AI, Costco, Zscaler and more, Dell, Zscaler, ChargePoint fall premarket; Tesla, Hewlett Packard rise, After-hours stock movers: C3.ai jumps on results, Zscaler falls, Macy's, Salesforce and Okta rise premarket; Silvergate, Tesla fall, After-hours movers: Salesforce surges on beat, Silvergate falls on 'going concern' warning. Altimeter. Digital Markets Act (DMA): How the EU Law Will Work, Mark Zuckerberg: Founder and CEO of Meta (formerly Facebook), Crowdfunding: What It Is, How It Works, Popular Websites, FTX: An Overview of the Exchange and Its Collapse, New Prices for Meta Quest 2s 256GB SKU + Meta Quest Pro, Time to Get Fit an Open Letter from Altimeter to Mark Zuckerberg (and the Meta Board of Directors), Meta Reports Fourth Quarter and Full Year 2022 Results. Frankly, if I was Sea Limited, if I was Uber, I might be looking at consolidating the business. And Meta certainly has abundant financial resources to invest and / or return to shareholders. Meta stock is down over 61% in 2022. Altimeter Capital's Brad Gerstner Issues Open Letter to Meta (NASDAQ: META) and Mark Zuckerberg. 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. Altimeter and PAR believe these experienced professionals can bring meaningful experience, objective oversight, and powerful change to United. They are people with families and kids to support. Can it possibly be worth 200 billion? 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. 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. Right? Copyright 2023 Bennett, Coleman & Co. Ltd. All rights reserved. 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. 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 they have to take a look at their capital allocation plan. But Meta needs to get its mojo back. WAPNER: Let me lastly ask you about Grab, the SPAC deal you did, biggest SPAC deal ever of $40 billion. 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. Read More . Limit investment in metaverse / Reality Labs to no more than $5B per year. It's my job to ask you about it knowing you're not happy about it and you answered the question. 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. I would take it a step further and argue that these incredible companies would run even better and more efficiently without the layers and lethargy that comes with this extreme rate of employee expansion. But it's good to be here and and you know, while I think we we did see the normalization and multiples as a likely outcome toward the end of last year. When you visit the site, Dotdash Meredith and its partners may store or retrieve information on your browser, mostly in the form of cookies. That's what makes markets. Like many other companies in a zero rate world Meta has drifted into the land of excess too many people, too many ideas, too little urgency. We believe the future lies in AI. articles a month for anyone to read, even non-subscribers! We've never seen on the order of magnitude of the Marshall Plan at the beginning of COVID. In fact, our internet stock index is at a 10-year low and software is back nearly where we were in 2016 before the rerating of software occurred. 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. As a result, the team hastily pivoted the company toward the metaverse including a surprise re-naming of the company to Meta. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. See here for a complete list of exchanges and delays. 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. "Jitesh Ubrani: Tweet From March 3, 2023. Those decisions include slashing expenditure and reducing headcount, the CEO of Altimeter Capital told Meta founder Mark Zuckerberg in an open letter. Grab Holdings is reportedly in talks to go public through a merger with a "blank check" company that could value the Southeast Asian ride-hailing startup at as much as . This compensation may impact how and where listings appear. The letter is the latest sign that Meta investors are starting to express reservations about the company's recent performance. GERSTNER: Scott, thanks for having me. I'm not a seller. Altimeter Capital is an American investment firm based in Boston, Massachusetts and Menlo Park, California. 2023 Benzinga.com. Investopedia does not include all offers available in the marketplace. Login Altimeter said annual free cash flow can be doubled to $40 billion (roughly Rs. 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.. 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. 2,06,700 crore) a year and capped annual investment in the metaverse to $5 billion (roughly Rs . CNBC Exclusive: CNBC Transcript: Altimeter Capital Founder & CEO Brad Gerstner Speaks with CNBC's Scott Wapner on "Closing Bell: Overtime" Today Published Mon, Mar 14 20225:56 PM EDT Share. Meta Platforms CEO Mark Zuckerberg speaks about the Facebook News feature at the Paley Center For Media in New York on Oct. 25, 2019. committed hundreds of millions of dollars to Sequoia Capital, Altimeter Capital Management and Multicoin . 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. We simply wanted to further engage and continue sharing our thoughts as an interested shareholder. At Meta, the number of employees is up over 3x from 25k to 85k employees in just the last four years! 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. In fact, we believe that augmented and artificial intelligence has the potential to drive more economic productivity than the internet itself. "An estimated $100B+ investment in an unknown future is super-sized and terrifying, even by Silicon Valley standards," Gerstner wrote. This is expected to facilitate trade as the West ratchets up sanctions on Russia. Do they want to stand with me and ride that out? So we're in the neighborhood of a tradable bottom. The last 10 years have been a unique time in tech and for Meta. Based on yesterday's announcement, it seems the Board now agrees that for many years it operated with a suboptimal composition. Everybody knows we've been in this company for a long time. +Includes DocuBay and TimesPrime Membership. I have been told that Amazon spent far less in total to build AWS. The industry leader for online information for tax, accounting and finance professionals. . And I think they have to execute against the underlying operations in the business. Altimeter was founded in 2008 and is headquartered out of Boston, Massachusetts. 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. 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 did not specify which of Alitmeter's SPACs Grab was in talks with. 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. Meta. 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. Please refer to the section on cookies in our Website Privacy Policy 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 . Your P/E ratio has fallen from 23x to 12x and now trades at less than half the average P/E of your peers. 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. The Wall Street Journal reported on Thursday that Grab was in talks with Altimeter. 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. 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. 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. Includes DocuBay and TimesPrime Membership. International Swaps and Derivatives Association. Brad Gerstner, Founder and CEO of Altimeter Capital; former board member of Orbitz Worldwide; 10. Ro $500.0M. How big is that market? "Meta Reports Fourth Quarter and Full Year 2022 Results," Page 10. After all, why not hire more people and invest in more things when the cost of capital was near zero and growth seemed unlimited? 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. We want to hear from you. Today, the cost of capital has radically changed, and so has Metas growth rate. This is a leading internet company in Southeast Asia. We had given most of that up by middle of December. As such, we would encourage the company to move aggressively and cut at least 20% of employee-related expenses by January 1, 2023. After the pandemic, hospitals are now on a strong footing. In the letter, Gerstner said Altimeter Capital doesn't have demands and simply wants to engage with Meta management. Sincerely, Meta reported in February that Reality Labs lost $13.72 billion in 2022. 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. But what is the right amount? In addition, people are confused by what the metaverse even means. Where's your exposure today? Enjoy a 7-Day Free Trial Thru Feb 17, 2023! Rodney O'Neal, former CEO of Delphi Automotive; former board member of Delphi Automotive, Sprint, and Goodyear; 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. Got a confidential news tip? I mean, two years ago we were we were having this conversation. He said the money the company is currently spending to develop VR could add up for a decade before it comes to fruition. The facts are startling. 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. So the way companies have to get there is by growing their top line and growing their bottom line, the answer as to all companies many most certainly will not. Global Business and Financial News, Stock Quotes, and Market Data and Analysis. Crowdfunding is the use of small amounts of capital from a large number of people to raise money or fund a business. Look at another one that I know is in your book or at least it was Roblox is down 74% from its 52-week high. And for us, we consolidate behind the things we have deep conviction in with confidence they're going to be worth more in the future. Altimeter Growth Corp. 2 raised $400 million in a January IPO. This is a business it's grown, it's trading at 28 times free cash flow with 20% growth, that will continue to compound. The conventional wisdom press and investor is that the core business hit a wall last fall. Musk Made a Mess at Twitter. 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%. 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. On Oct. 11, Meta announced a new high-end VR headset, the Quest Pro. As such, we think Meta company should cap its metaverse investments to no more than $5B per year with more discrete targets and measures of success, as opposed to todays much more ambitious and open-ended strategy. It's our largest position we're not selling but we acknowledge that it's been rough for our investors, rough for us. 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. See the Top Performing Hedge-Funds > Brad Gerstner . What do you think? Chicago, IL 60606 Warren Buffett's: Berkshire Hathaway. Mar 11, 2021 3:07 PM EST. 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. It can do great this, the business can be incredible. 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. Gordon Bethune, former CEO of Continental Airlines; board member of Honeywell, Prudential Financial, and Sprint; And now we've shot right through the five-year average. 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. And I appreciate you being with me on the very first "Overtime" show. 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 $20-$25B of annual capex, Meta will still be investing market leading amounts to help invent the future of AI. We didn't think that was durable. 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Worse, this skepticism seemed to be affirmed with a nearly-immediate and sizable miss in financial results and continued under-performance throughout 2022. We were about 30% to 40% depending upon which basket you looked at software internet above the five-year average. By any normal company or start up standard, $5 B per year would seem like an extraordinary amount. How many increases? We want to hear from you. Will His AI Plans Be Any Different? We do not take job reductions lightly. Meta and other large companies have made it very difficult for start-ups to hire. We also reference original research from other reputable publishers where appropriate. 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. The bet . In addition, people are confused by what the metaverse even means. 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. Get this delivered to your inbox, and more info about our products and services. 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). Altimeter Capital Management, LLC a Portfolio Activity as reported in the most recent 13F form published on Dec 31, 2022. FTX, once the third-largest centralized cryptocurrency exchange, is now in U.S. bankruptcy. Facebook's revenues in Q1 were lower than people expected. I expected that as the world of normalized post Omicron that we would get back to the five-year average multiple. My bet is we're gonna have less this year. 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. 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. Altimeter Capital Management is an investment firm with offices in Menlo Park, CA, and Boston, MA. 9/29/2022 1:05 AM. 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. 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. How many dogs want to eat the dog food? In short, Meta needs to get fit and focused. We've destroyed over $15 trillion of stock market wealth. I have deep respect and admiration for founders that continue to grind, inspire, and invent long after the financial motivation is gone. Credit Derivatives Determinations Committees, how to enable Board of Directors You would simply do R&D quietly and investors would focus on the core business and the breakthroughs in AI. The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs. Days Trial 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. Altimeter Capital Management, LLC. 3,30,700 crore) if it cut headcount by at least 20 percent, trimmed capital expenditure by at least $5 billion (roughly Rs. It's our largest position in the book. 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. These are not numbers on a spreadsheet. Chief Executive Officer In fact, we believe that augmented and artificial intelligence has the potential to drive more economic productivity than the internet itself. 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. So I am very unhappy because I've lost money on the deal. The silver lining is that unlike many companies, this popular narrative obscures the truth. Benchmark Reform and Transition from LIBOR InfoHub, Use of Chinese Government Bonds as Margin, Updated OTC Derivatives Compliance Calendar, ISDA-Clarus RFR Adoption Indicator: January 2023. browser. Accept. This is a business it's trading at 12 times free cash flow, X the meta investment and 18 times including. 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. On top of that we had supply chain challenges. Before we we move, what do I do with Facebook? I imagine they're going to be super aggressive about how they're buying back shares. 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. Chase Coleman's: Tiger Global Management. If multiples expand then you have even more upside. Is it close to being done? Two years from now, people are going to be looking back and say, why the hell didn't you buy Snowflake at 160 bucks a share? It can do that by making. 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). It's been a big drawdown this year. Consumer confidence is plummeting. c/o Chairman Henry L. Meyer III The Singaporean rideshare giant Grab is set to merge with the SPAC Altimeter Growth 1, according to a report from The Financial Times. Can you tell me where that stands now and how you view stocks like that that have gotten absolutely obliterated? Brad Gerstner's Phone Number and Email Last Update. Some companies require tremendous capex investment to maintain their existing business. 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.
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