9/29/2022 1:05 AM. 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. 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. Email. Revenue. 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. Following careful consideration, we have firmly concluded that meaningful change to United's existing Board of Directors is urgently required in order to reverse long-standing poor Board governance and the resulting many years of substantial and inexcusable Company underperformance relative to United's competitors. Ro $500.0M. 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 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." 2023 International Swaps and Derivatives Association, Inc. 233 South Wacker Drive You do, you do great work, excited for the new show and let's stay after it. I can't tell you what's going to happen the next three days or the next three weeks or even three months. You can learn more about the standards we follow in producing accurate, unbiased content in our. Nov. 16, 2021 at 2:38 p.m. I don't think there's any chance that the Fed is going to raise rates 10 times this year. committed hundreds of millions of dollars to Sequoia Capital, Altimeter Capital Management and Multicoin . 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. Altimeter Capital Management, LLC a Portfolio Activity as reported in the most recent 13F form published on Dec 31, 2022. Tina Sharkey, CEO of SherpaFoundry; former board member of HomeAway; and Get your daily dose of business updates on WhatsApp. Unlock your 30 days free access to ETPrime now. At Meta, the number of employees is up over 3x from 25k to 85k employees in just the last four years! At the end of the second. 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. 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. But admittedly, you know, nights like tonight we'll we'll get we'll catch a little less sleep. 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? ", Medium.com. With the gains posted on March 3, Meta Platforms shares are up 54% this year. And frankly, I was going to play some sound from you from our Delivering Alpha event last September where you called a lot of this but I don't even have to do that anymore because you just went through it. 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. I think, or inflation, I think they're behind the curve on recession. Altimeter Capital. We had given most of that up by middle of December. PAR Capital Management, Inc. Do Not Sell My Personal Data/Privacy Policy. 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. Social networking is the use of internet-based social media platforms to make connections and share various media with friends, family, colleagues, or customers. 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 PLAN, Access the exclusive Economic Times stories, Editorial and Expert opinion, 90 Days Prime access worth Rs999 unlocked for you, Exclusive Economic Times Stories, Editorials & Expert opinion across 20+ sectors, Stock analysis. Altimeter Capital Management, LP ("Altimeter") is an SEC-registered investment adviser. Crowdfunding is the use of small amounts of capital from a large number of people to raise money or fund a business. 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. 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. In fact, we believe that augmented and artificial intelligence has the potential to drive more economic productivity than the internet itself. Meta has also been feeling pressure to improve the finances of its Reality Labs, the company's metaverseunit, which includes the VR headsets. I think if you said why might these numbers have to come down if we're heading into a recession, the numbers are likely to come down. In addition, people are confused by what the metaverse even means. 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. Despite public skepticism at times warranted we have been supporters of the companys strategy to continuously reinvest in a product-led future and its mission to make the world more open and connected. 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. We do not take job reductions lightly. To put that in perspective, excluding your large metaverse investment, Meta is investing more in capex than Apple, Tesla, Twitter, Snap, and Uber combined! As always, we welcome the opportunity to engage in further discussions focused on this shared objective. Subject: Meaningful Board Change Required And Meta certainly has abundant financial resources to invest and / or return to shareholders. "Jitesh Ubrani: Tweet From March 3, 2023. After the pandemic, hospitals are now on a strong footing. 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. As I look at it, the market is now pricing in at least seven rate hikes. 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. It's our largest position we're not selling but we acknowledge that it's been rough for our investors, rough for us. You got a lot of this right but multiples have come down a heck of a lot to this point. Nobody debates whether or not this company is going to be more valuable in the future. The firm's private equity arm makes all-stage venture capital investments, primarily in the technology sector. . Brad Gerstner is the Founder & Chief Executive Officer at Altimeter Capital based in Boston, Massachusetts. Right? 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. Chief Executive Officer We'll see you soon. We also believe Metas investment in AI will lead to exciting and important new products that can be cross-sold to billions of customers. Meta (Facebook) Begins Biggest Layoffs in Company's History, Meta (META) Connect Conference Key Takeaways, Meta (Facebook) Shares Slammed as Earnings, Spending Disappoint. We know Meta has more reach, more relevance, and more incredible opportunities for growth than almost any platform on the planet. $6.9 M. Is it done? 2023 Benzinga.com. "An estimated $100B+ investment in an unknown future is super-sized and terrifying, even by Silicon Valley standards," Gerstner wrote. Ultimately, Gerstner said, Meta has too many people and is spending too much on capital expenditures. 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. Days Trial. 2023 CNBC LLC. Frankly, if I was Sea Limited, if I was Uber, I might be looking at consolidating the business. When you visit the site, Dotdash Meredith and its partners may store or retrieve information on your browser, mostly in the form of cookies. The bet . See here for a complete list of exchanges and delays. 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. 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. Altimeter Capital's Brad Gerstner Issues Open Letter to Meta (NASDAQ: META) and Mark Zuckerberg. Chicago, IL 60606 In short, Meta needs to get fit and focused. Right. Search ISDA ISDA fosters safe and efficient derivatives markets to facilitate effective risk . If multiples expand then you have even more upside. Why 20%? 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. It's also a vote of less confidence about the company's ambitions in the world of virtual and augmented reality. I just happen to look at a Snowflake it's in front of me and because it's your largest position, I say can Snowflake really get back to its 52-week high of $405 a share. 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. If you click the "Accept" button, you consent to the use of cookies on our website. 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. 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. So these are different order of magnitude bets. I don't think they can. We worked hard on the deal and the timing was horrific. 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. So no, these issues are rea,l what's going on in Russia is real, what's going on in Europe is real. 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. Based on yesterday's announcement, it seems the Board now agrees that for many years it operated with a suboptimal composition. We're withdrawing trillions off the Fed's balance sheet. CAPEX Investing Aggressively and Responsibly in the Future of AI. It massively distorted multiples on the way in and it's massively distorting multiples on the way out. Brad, thank you. The changes for the Quest 2 begin Sunday, March 5. 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. WAPNER: I wanna, I want to take a break and get into some of those names of all four but before I do that lastly, you mentioned very interestingly that you've taken your bond short off. 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. 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. Some companies require tremendous capex investment to maintain their existing business. Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts. 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. We didn't think that was durable. 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. They're fearful about the war. Menlo Park, CA 94025 (650) 549-9145 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies: . After all, why not hire more people and invest in more things when the cost of capital was near zero and growth seemed unlimited? Altimeter manages a long / short public equity fund and private growth equity funds. 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. See here for a complete list of exchanges and delays. 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. Meta shares moved 6% higher following the announcement. effective risk management for all users of derivative products. Meta stock is down over 61% in 2022. This will alert our moderators to take action. Can they maintain their growth momentum? Portfolio Gain +273.45%. Board of Directors Limit investment in metaverse / Reality Labs to no more than $5B per year. In our view given United's valuable and industry-leading strategic asset base this long-term underperformance directly results from an underqualified, ineffective, complacent, and entrenched Board. Focusing the Metaverse: the Next Generation of Communication and Collaboration. Choose your reason below and click on the Report button. Meta Platforms, which is set to report third-quarter results on Wednesday after markets close, declined to comment. We are generally patient investors. You can find out more about our use, change your default settings, and withdraw your consent at any time with effect for the future by visiting Cookies Settings, which can also be found in the footer of the site. 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. The bottom line is where I wanted to start this whole interview with is you called it. 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. Altimeter Capital Management is a technology focused investment firm based in Menlo Park, CA and Boston, MA. They're building their own ad platform, right, that can deal with this. 2550 Sand Hill Road, Suite 150. So were Shopify's and so were PayPal. Ram Parameswaran is the founder of Octahedron Capital, a global, growth-oriented investment firm that seeks to make concentrated investments in leading public and private companies that drive the world's internet economy. 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. The full text of the stockholder letter to the United Board follows: March 8, 2016. And then take that part of the world. You probably know you should capitalize proper nouns and the first word of every sentence. 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. Drew Angerer | Getty Images News | Getty Images, Meta needs to focus on its core business, not the Metaverse, says Sand Hill's Brenda Vingiello. Skip to main content. ISDA fosters safe and efficient derivatives markets to facilitate The stock today hit a new low under $3. Ray Dalio's: Bridgewater Associates. 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. We dont have any demands. David Einhorn's: Greenlight Capital. So I think they got to match the investment to the revenue growth of the business. 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. To experience the full functionality of the ISDA website, it is necessary to enable Javascript in your FREE Breaking News Alerts from StreetInsider.com! 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. That could in fact become a tailwind as we get to the back half of the year. To read full story, subscribe to ET Prime, Billed annually at 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? Of course, a company that connects nearly three billion users on phone and text must be investing in the next generation of communication. Brad Gerstner founded the. Got a confidential news tip? He also asked Zuckerberg to cut down on capex and employee expenses. Sign Up. These are not numbers on a spreadsheet. Data is a real-time snapshot *Data is delayed at least 15 minutes. 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. He said the money the company is currently spending to develop VR could add up for a decade before it comes to fruition. We believe the future lies in AI. Meta Platforms CEO Mark Zuckerberg speaks about the Facebook News feature at the Paley Center For Media in New York on Oct. 25, 2019. Altimeter. It's interesting that now today you say we're in the neighborhood of a tradable bottom. Over time, we intend to share with United's stockholders our detailed analysis, which has led us to conclude, among other things, that: Meta stock is down over 61% in 2022. Our best guess is that maintenance capex for Meta is less than $10B annually. As such, we would encourage the company to move aggressively and cut at least 20% of employee-related expenses by January 1, 2023. Altimeter Capital Management, LLC. In the last 18 months, Meta stock is down 55% (compared to an average of 19% for its big-tech peers). It's been a big drawdown this year. Today, the cost of capital has radically changed, and so has Metas growth rate. This would double annual FCF and put FCF as a percentage of revenue more in line with Google, Microsoft, and Apple. 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 . As such, we think during this period of growth transition and economic uncertainty, the company should decrease capex by at least $5B and maintain this discipline until revenues re-accelerate bringing our capex as a percentage of revenue more in line with our large cap peers. GERSTNER: Well, the first thing I would say is this, set aside SPAC. Meta has spent billions and hired thousands of employees around the world to build the metaverse, which refers to a shared digital environment that uses augmented or virtual reality technology to make it feel more realistic. Right. This compensation may impact how and where listings appear. Altimeter is focused on technology investment, and has found multi-billion-dollar success. With all of this said, we truly believe that the company should be making some of these important investments. This is expected to facilitate trade as the West ratchets up sanctions on Russia. This is a business it's trading at 12 times free cash flow, X the meta investment and 18 times including. Usually you don't capitalize after a colon, but there are exceptions. "If the company were investing $1-2B per year into this project, then that confusion might not even be a problem.". I mean you have defended it at every turn from the issues that the company has had you you defended Mark Zuckerberg, you've defended Sheryl Sandberg and you you did it quite loudly on this program. At the same time that Meta ramped up spend, you lost the confidence of investors. So we're in the neighborhood of a tradable bottom. Conforti plans to join a new firm as a co-founder with. How big is that market? ", 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%. 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. "In addition, people are confused by what the metaverse even means," Gerstner wrote. https://www.cnbc.com/video/2022/03/14/we-could-go-lower-before-we-go-higher-in-stocks-says-altimeter-capitalas-ceo-brad-gerstner.html. Altimeter Growth Corp. 2 raised $400 million in a January IPO. Gordon Bethune, former CEO of Continental Airlines; board member of Honeywell, Prudential Financial, and Sprint; 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. I don't think Mark did a particularly good job of explaining the meta investments. Sign up for free newsletters and get more CNBC delivered to your inbox. Altimeter Capital Management is an investment firm that operates within the technology sector. It has 24 billion in free cash they're going to generate this year. The Meta investor recommends a plan to get the company's "mojo back.".

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