Headquarters Location One International Place Suite 2400 Boston, Massachusetts, 02110, United States 617-310-6180 Suggest an edit Advertisement Gerstner, through Altimeter, manages over $15.0 billion worth of investments across private equity and venture capital. Altimeter.com is Altimeter's only website. As you know, Altimeter Capital Management and PAR Capital Management are long-term United Continental Holdings, Inc. ("United") stockholders that together own approximately 7.1% of United's outstanding common stock. Meta can get its mojo back, says Brad Gerstner, but it will have to take some hard decisions first. 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. Ultimately, Gerstner said, Meta has too many people and is spending too much on capital expenditures. 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. 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. JavaScript in your web browser. WAPNER: I hear you. An estimated $100B+ investment in an unknown future is super-sized and terrifying, even by Silicon Valley standards. 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. Experience Your Economic Times Newspaper, The Digital Way! 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. 233 South Wacker Drive +Includes DocuBay and TimesPrime Membership. Limit investment in metaverse / Reality Labs to no more than $5B per year. Getting Fit Headcount Reduction / Expense Control. Stock Radar: 19% from Budget Day! The silver lining is that unlike many companies, this popular narrative obscures the truth. It includes reducing headcount expenses by 20% and limiting the company's pricey investments in "metaverse" technology to no more than $5 billion per year. Updated on September 30, 2022. We can just go through the list, Uber, Facebook, Roblox. 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. Cookies collect information about your preferences and your devices and are used to make the site work as you expect it to, to understand how you interact with the site, and to show advertisements that are targeted to your interests. 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. 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. At the end of the second quarter this year, Altimeter Capital held more than 2 million shares of Meta. As you know, we are long-term shareholders. If the deal goes through, it. We think this is a 3X in three years even if software multiples remain at these levels near the five-year average. 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. If you really think about what the metaverse is in the first instance, it's a better version of what you and I are doing right here. What's going to be the inflation print in April? FREE Breaking News Alerts from StreetInsider.com! click here! CAPEX Investing Aggressively and Responsibly in the Future of AI. Altimeter Capital owns about 2.46 million Meta shares. Got a confidential news tip? Worse, this skepticism seemed to be affirmed with a nearly-immediate and sizable miss in financial results and continued under-performance throughout 2022. Right? Meta changed its company name from Facebook. 15 Some companies require tremendous capex investment to maintain their existing business. 2-Year I remember people asking that question about Amazon. With all of this said, we truly believe that the company should be making some of these important investments. 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 The letter is the latest sign that Meta investors are starting to express reservations about the company's recent performance. Congrats on the new show. Barney Harford, former CEO of Orbitz Worldwide; former board member of Orbitz Worldwide and eLong; It added that VR is "a powerful social platform and creative technology, and the more people with access to it, the better. 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. Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more! Altimeter Capital's Brad Gerstner Issues Open Letter to Meta (META) and Mark Zuckerberg Article Related Articles ( 4) Stock Quotes (1) October 24, 2022 8:20 AM EDT Tweet Share E-mail Get. The facts are startling. We believe that our conclusion is shared by many of United's long-suffering stockholders, customers, and 80,000+ dedicated employees. 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. b***@altimeter.com. 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. The technology-focused hedge fund with a 0.1% ownership claimed that the company had lost investor confidence as it increased . They were cratering ironically, now we're normalizing and growth stocks are down even more than they were at the start of COVID. I mean, we're talking about billions of dollars in revenue but you left that out. Data is a real-time snapshot *Data is delayed at least 15 minutes. With SNOW currently trading at $242, that stake is now worth $8.8 billion. 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. 10. Days Trial They are people with families and kids to support. 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. 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. Today, the cost of capital has radically changed, and so has Metas growth rate. So I think they got to match the investment to the revenue growth of the business. He defied expectations and made profits on Priceline, Expedia, Uber, Twilio, and Hubspot. 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. The Wall Street Journal reported on Thursday that Grab was in talks with Altimeter. 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. And I appreciate you being with me on the very first "Overtime" show. Think about this, Scott. 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. Warren Buffett's: Berkshire Hathaway. [3] They're building their own ad platform, right, that can deal with this. We're withdrawing trillions off the Fed's balance sheet. Meta. WAPNER: Man, I love how honest you are and I know our viewers do as well. I have been told that Amazon spent far less in total to build AWS. 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. With that said, we have a shortage of talent in Silicon Valley. Credit Derivatives Determinations Committees, how to enable Where's your exposure today? We do not take job reductions lightly. I don't think Mark did a particularly good job of explaining the meta investments. This is a business it's grown, it's trading at 28 times free cash flow with 20% growth, that will continue to compound. Altimeter Capital's Brad Gerstner Issues Open Letter to Meta (NASDAQ: META) and Mark Zuckerberg. Consumer confidence is plummeting. 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. The Digital Markets Act (DMA) is a groundbreaking European law designed to rein in the power of the gatekeepers of the digital economy. 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. 3. for a description of how we use cookies. It just launched in 150 countries, has over a billion views. Capital October 20, 2022 Risk & Capital. That's what makes markets. What do you think? 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. The silver lining is that unlike many companies, this popular narrative obscures the truth. The full text of the stockholder letter to the United Board follows: March 8, 2016. 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've destroyed over $15 trillion of stock market wealth. So were Shopify's and so were PayPal. Reels, which is a massive product is going to increase its monetization between now and the end of the year. You know, I said on Twitter a few weeks ago, I don't think the Fed's behind the curve on rates. 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. They may never get back to the levels at which they traded before. He also asked Zuckerberg to cut down on capex and employee expenses. The comp against IDFA was very difficult in Q1 and will again be difficult in q2. WAPNER: I know I know you're not happy about it. 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 CNBC LLC. Background [ edit] In 2008, Brad Gerstner founded Altimeter Capital in Boston, Massachusetts. 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. At $20-$25B of annual capex, Meta will still be investing market leading amounts to help invent the future of AI. 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. Southeast Asian superapp Grab is likely to set a world record by selling itself into a special purpose acquisition company, or SPAC, run by U.S. tech venture capital investors Altimeter Capital . But you also (sometimes) capitalize the first word of a quote. 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%. He said the money the company is currently spending to develop VR could add up for a decade before it comes to fruition. We also reference original research from other reputable publishers where appropriate. But listen, there's massive uncertainty in the world. Capitalizing on the fund's VC success, Gerstner raised $450M for Altimeter Growth Corp (AGCUU), a blank check company IPO targeting the tech sector. It lost $5.8 billion in the first six months of the year. WAPNER: Let me lastly ask you about Grab, the SPAC deal you did, biggest SPAC deal ever of $40 billion. Gordon Bethune, former CEO of Continental Airlines; board member of Honeywell, Prudential Financial, and Sprint; Indias general insurers are looking to set up a larger marine insurance pool to cover the risks of transporting crude oil, edible oil, project machinery and fertiliser from the war-torn Russia-Ukraine region. Hedge Fund Manager. I think, or inflation, I think they're behind the curve on recession. 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. To read full story, subscribe to ET Prime, Billed annually at There is no doubt that doubling annual FCF will improve share price. "New Prices for Meta Quest 2s 256GB SKU + Meta Quest Pro. Tina Sharkey, CEO of SherpaFoundry; former board member of HomeAway; and effective risk management for all users of derivative products. 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. With the gains posted on March 3, Meta Platforms shares are up 54% this year. Tesla recalls 3,470 Model Y vehicles over loose bolts, Exclusive: Nvidia's plans for sales to Huawei imperiled if U.S. tightens Huawei curbs-draft, Reporting by Akash Sriram in Bengaluru; Editing by Arun Koyyur and Anil D'Silva, Mexico can't match U.S. incentives for proposed Tesla battery plant, minister says, Taiwan's TSMC to recruit 6,000 engineers in 2023, Exclusive: Snapchat kicks few children off app in Britain, data given to regulator shows, Exclusive news, data and analytics for financial market professionals. In the last 18 months, Meta stock is down 55% (compared to an average of 19% for its big-tech peers). Subject: Meaningful Board Change Required Meta needs to regain the confidence of investors, the public and employees, Altimeter Capital Management CEO Brad Gerstner said Monday in an open letterto Zuckerberg. We'll see you soon. You probably know you should capitalize proper nouns and the first word of every sentence. By any normal company or start up standard, $5 B per year would seem like an extraordinary amount. Dear Chairman Meyer and Board Members: Focusing the Metaverse: the Next Generation of Communication and Collaboration. You do, you do great work, excited for the new show and let's stay after it. To put it in perspective, Roblox was a couple percent position for us, right, and Snowflake was a 30% position for us. committed hundreds of millions of dollars to Sequoia Capital, Altimeter Capital Management and Multicoin . We simply wanted to further engage and continue sharing our thoughts as an interested shareholder. FalconX Raises $210M Following 30x YoY Revenue Growth; Now Valued at $3.75 Billion Series C Led by Altimeter Capital, B Capital Group, Sapphire Ventures, and Tiger Global Management, with. What is the rate of increase? Right? I'm not a seller. If you click the "Accept" button, you consent to the use of cookies on our website. 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. "Time to Get Fit an Open Letter from Altimeter to Mark Zuckerberg (and the Meta Board of Directors).". Sign up for free newsletters and get more CNBC delivered to your inbox. Nov. 16, 2021 at 2:38 p.m. In preparation for its first-ever mass tournament, Chronos will feature a fantasy-theme RPG with the potential to earn prizes and a chance to win based on the classes of playable . Bruce Berkowitz's: Fairholme Capital Management. Conforti plans to join a new firm as a co-founder with. The metaverse is a shared virtual environment with aspects of online gaming, augmented reality, and more that people can access via the Internet. He said a 20% cut in employee spending would take Meta back to the levels of staffing it had last year and argued that the company can't spend as it used to since the cost of capital and interest rates have risen recently. I don't think they can. If they just take the incremental cash they're going to generate this year and buy back shares that's 6% of the company Scott, let alone the 50 billion in cash they have sitting on the balance sheet. I don't think the Fed is going to throw away two years' worth of work to try to avoid a recession in a election year and run us straight into the teeth of a recession while we're trying to fight a war in Europe. Ray Dalio's: Bridgewater Associates. 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. If the company were investing $12B per year into this project, then that confusion might not even be a problem. 2499 1749, Monthly BRAD GERSTNER: Hey, Scott, thanks for having me. Altimeter Capital Management, LP ("Altimeter") is an SEC-registered investment adviser. Meta. "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. We have $130 oil and $6 gas at the pump. GERSTNER: Well, the first thing I would say is this, set aside SPAC. I expected that as the world of normalized post Omicron that we would get back to the five-year average multiple. 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. How many dogs want to eat the dog food? This is a company that only did 1.2 billion in revenue last year. 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. "If the company were investing $1-2B per year into this project, then that confusion might not even be a problem.". Facebook's revenues in Q1 were lower than people expected. Altimeter Capital Management, LLC a Portfolio Activity as reported in the most recent 13F form published on Dec 31, 2022. 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? But Meta needs to get its mojo back. Instead, they grew at 106%. To accomplish this goal, we recommend a three step plan that will double FCF to $40 B per year and focus the companys teams and investments: Reduce headcount expense by at least 20%;Reduce annual capex by at least $5 B from $30B to $25B; andLimit investment in metaverse / Reality Labs to no more than $5B per year. And I think they have to execute against the underlying operations in the business. So these are different order of magnitude bets. 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 The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs. They just announced that they're going to be profit, full company profitable by 2023. 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 The answer to that is because people are very fearful. And we've had government intervention of the magnitude.
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