Rodney O'Neal, former CEO of Delphi Automotive; former board member of Delphi Automotive, Sprint, and Goodyear; ", 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%. 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. 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. Moreover, I am a strong supporter of founder-led companies especially when they have your successful track record of seeing the future. 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. 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. The lagging stock price under this Board's control and supervision directly reflects substantial underperformance in terms of operational reliability, customer satisfaction, market share, profitability, and return on invested capital. I said IDFA which is the Apple changes right? As you know, we are long-term shareholders. These include white papers, government data, original reporting, and interviews with industry experts. Mar 11, 2021 3:07 PM EST. The reductions for the Quest Pro start March 5 in the U.S. and Canada, and on March 15 in other countries where it is supported. Brad Gerstner Those decisions include slashing expenditure and reducing headcount, the CEO of Altimeter Capital told Meta founder Mark Zuckerberg in an open letter. So, its with some hesitation, but significant conviction, I am sharing an open letter strongly encouraging Meta to streamline and focus its path forward. How many increases? We had given most of that up by middle of December. This heavy equipment maker is a good buy on dips stock; heres why, Tears from smokeless cooking gas as consumers continue to bear price hikes on top of subsidy cuts. 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. Neither Altimeter, nor any of its affiliates or personnel, offers investment advisory services via the internet. Capital October 20, 2022 Risk & Capital. Altimeter Capital Management, LP ("Altimeter") is an SEC-registered investment adviser. Your Reason has been Reported to the admin. 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Social networking is the use of internet-based social media platforms to make connections and share various media with friends, family, colleagues, or customers. 2023 International Swaps and Derivatives Association, Inc. I don't think there's any chance that the Fed is going to raise rates 10 times this year. 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. 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. They were buying goods, soccer balls on DICK's Sporting Goods and candles on Williams Sonoma. Form of Letter Agreement between the Registrant, the Sponsor and each director and executive officer of the Registrant. In the letter, Gerstner said Altimeter Capital doesn't have demands and simply wants to engage with Meta management. Please refer to the section on cookies in our Website Privacy Policy We didn't think that was durable. What is the connection between those three companies. 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). When you visit the site, Dotdash Meredith and its partners may store or retrieve information on your browser, mostly in the form of cookies. Altimeter Capital Management, LLC a Portfolio Activity as reported in the most recent 13F form published on Dec 31, 2022. 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. effective risk management for all users of derivative products. In fact, we believe that augmented and artificial intelligence has the potential to drive more economic productivity than the internet itself. 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. 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%. The Digital Markets Act (DMA) is a groundbreaking European law designed to rein in the power of the gatekeepers of the digital economy. By any normal company or start up standard, $5 B per year would seem like an extraordinary amount. Learn the pros and cons of crowdfunding. I expected that as the world of normalized post Omicron that we would get back to the five-year average multiple. The answer to that is because people are very fearful. With that said, we have a shortage of talent in Silicon Valley. 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. But far from being a bad decision, we think the recommendations outlined above will lead to a leaner, more productive, and more focused company a company that regains its confidence and momentum. And now we've shot right through the five-year average. They're fearful about what's going to happen with rates. Potential Choices for HF Roles from Undergrad | Wall Street Oasis 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 All Rights Reserved. Panel led by former SC judge to include NaBFID chair KV Kamath and Infys Nandan Nilekani. 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 . 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. It said Grab is expected to raise between. It just launched in 150 countries, has over a billion views. I mean, we're talking about billions of dollars in revenue but you left that out. Meta reported in February that Reality Labs lost $13.72 billion in 2022. Altimeter Capital's Brad Gerstner Issues Open Letter to Meta (NASDAQ: META) and Mark Zuckerberg. 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. But what is the right amount? In short, Meta needs to get fit and focused. WAPNER: Let me lastly ask you about Grab, the SPAC deal you did, biggest SPAC deal ever of $40 billion. The Singaporean rideshare giant Grab is set to merge with the SPAC Altimeter Growth 1, according to a report from The Financial Times. The firm's private equity arm makes all-stage venture capital investments, primarily in the technology sector. A securities lawyer, Brad Gerstner graduated from HBS in 2000 and joined General Catalyst. It's our largest position we're not selling but we acknowledge that it's been rough for our investors, rough for us. Conclusion A Leaner, Faster, More Successful Meta. 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. So these are different order of magnitude bets. I have been told that Amazon spent far less in total to build AWS. Altimeter SPAC Taking Grab Public | PYMNTS.com This compensation may impact how and where listings appear. Meta investor Altimeter Capital urges Mark Zuckerberg to slash jobs This is expected to facilitate trade as the West ratchets up sanctions on Russia. I'm not a seller. Altimeter Capital Management, - GuruFocus.com When you were with me in December, you said that you had picked some more of that up along with Snowflake. Brad Gerstner founded the. Stock Radar: 19% from Budget Day! If the company were investing $12B per year into this project, then that confusion might not even be a problem. It's been a half century since Australia and China established formal relations, but neither side is really celebrating. 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. 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. And we've had government intervention of the magnitude. How many dogs want to eat the dog food? Altimeter Capital launched its two SPACs in October and January, raising a combined $850 million between the two blank-check vehicles. Some companies require tremendous capex investment to maintain their existing business. Southeast Asia's Grab in talks for U.S. listing via $40 billion SPAC Ultimately, Gerstner said, Meta has too many people and is spending too much on capital expenditures. Despite public skepticism at times warranted we have been supporters 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. These are not numbers on a spreadsheet. Welcome to "Overtime.". I think we spent about an hour together. Limit investment in metaverse / Reality Labs to no more than $5B per year. GERSTNER: Scott, thanks for having me. Credit Derivatives Determinations Committees, how to enable 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. Why didn't you buy, you know, Uber at 28 bucks a share? We've never seen on the order of magnitude of the Marshall Plan at the beginning of COVID. Why 20%? Meta didn't immediately respond to a request for comment. 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. GERSTNER: Well, the first thing I would say is this, set aside SPAC. David Einhorn's: Greenlight Capital. "Meta Reports Fourth Quarter and Full Year 2022 Results," Page 10. 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. 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. GERSTNER: No, I didn't leave it out. What is the Fed going to do? 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. 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. Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more! browser. The silver lining is that unlike many companies, this popular narrative obscures the truth. See here for a complete list of exchanges and delays. We know Meta has more reach, more relevance, and more incredible opportunities for growth than almost any platform on the planet. 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. "In addition, people are confused by what the metaverse even means," Gerstner wrote. 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%. Superficial change in panicked response to rigorous scrutiny is hardly noble or a basis for stockholders to have confidence in your judgment. Can you tell me where that stands now and how you view stocks like that that have gotten absolutely obliterated? As always, happy to connect with you and your team. Before we we move, what do I do with Facebook? But you also (sometimes) capitalize the first word of a quote. "If the company were investing $1-2B per year into this project, then that confusion might not even be a problem.". They just announced that they're going to be profit, full company profitable by 2023. Benzinga does not provide investment advice. Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts. He also asked Zuckerberg to cut down on capex and employee expenses. NEW YORK, Nov. 16, 2021 (GLOBE NEWSWIRE) -- H1, which provides the largest global healthcare network that connects healthcare professionals, announced today that it has raised a $100M Series C. 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. Altimeter Capital owns about 2.46 million Meta shares. All quotes delayed a minimum of 15 minutes. Metas core business is one of the largest and most profitable in the world with over $45 B in operating profits last year alone. Getting Fit Headcount Reduction / Expense Control. What is the metaverse and why are billions of dollars being spent on it? 10. 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. 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. Altimeter's second tech SPAC Altimeter Growth Corp. 2 files - Nasdaq 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. On Oct. 11, Meta announced a new high-end VR headset, the Quest Pro. Brenda Yester Baty, Head of Strategic Initiatives at Lennar Corp.; former SVP Revenue Management at Carnival Cruise Lines. 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. You got a lot of this right but multiples have come down a heck of a lot to this point. Altimeter Capital Management is a technology focused investment firm based in Menlo Park, CA and Boston, MA. 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. Tech SPAC Altimeter Growth Corp. 2 prices further upsized $400 million articles a month for anyone to read, even non-subscribers! Think about this, Scott. Sign Up. 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. Prior to Octahedron, Ram was a partner and portfolio manager at Altimeter Capital, a multi-billion dollar investment firm . Southeast Asia's largest ride-hailing company, Grab Holdings, said Tuesday that it plans to merge with U.S.-based Altimeter Growth Capital in a deal that would value it at nearly $40 billion and . 3. The conventional wisdom press and investor is that the core business hit a wall last fall. It's interesting that now today you say we're in the neighborhood of a tradable bottom. Altimeter LLC. To put that in perspective, excluding your large metaverse investment, Meta is investing more in capex than Apple, Tesla, Twitter, Snap, and Uber combined! This company is perfectly positioned to capitalize on that they have the, the ad network to monetize it. Altimeter Capital Management, LP Buys Opendoor Technologies Inc, Toast Inc, Duolingo Inc, Sells . Australian Gold & Copper Ltd. - MarketWatch 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. 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. 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. 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. 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. 2499 1749, Monthly At the same time that Meta ramped up spend, you lost the confidence of investors. 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. I have deep respect and admiration for founders that continue to grind, inspire, and invent long after the financial motivation is gone. GERSTNER: Scott, I love that you asked the question. The letter is the latest sign that Meta investors are starting to express reservations about the company's recent performance. By any normal company or start up standard, $5 B per year would seem like an extraordinary amount. Meta shareholder wants Facebook parent to cut jobs, spending Updated on September 30, 2022. Is it done? 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. The changes for the Quest 2 begin Sunday, March 5. 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? 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. +Includes DocuBay and TimesPrime Membership. 41,300 crore) to $25 billion (roughly Rs. Worse, this skepticism seemed to be affirmed with a nearly-immediate and sizable miss in financial results and continued under-performance throughout 2022. 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. They're fearful about the war. Your P/E ratio has fallen from 23x to 12x and now trades at less than half the average P/E of your peers. 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. With all of this said, we truly believe that the company should be making some of these important investments. 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. 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. Altimeter Capital Management partner Chris Conforti plans to leave the investment firm, according to people with knowledge of the matter. Altimeter Growth Corp., the blank-check company merging with internet giant Grab Holdings Inc., is hovering just a few cents above its record low after cratering 28% since the deal was unveiled in . Conforti plans to join a new firm as a co-founder with. Now you didn't address any of the iOS changes and the revenue hit that Facebook is is assuming from that and those are legitimate changes. Brad Gerstner's Phone Number and Email Last Update. It's a better version of Messenger. And what is going to be the resolution to the situation in the Ukraine? Altimeter Capital Management, LLC - Brad Gerstner - TipRanks If the deal goes through, it. Samooha launches with tech that lets companies securely share data SPACs notched more than $70 billion so far in 2021, a new record. Consumer confidence is plummeting. I have been told that Amazon spent far less in total to build AWS. 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 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. I imagine they're going to be super aggressive about how they're buying back shares. Right? At Meta, the number of employees is up over 3x from 25k to 85k employees in just the last four years! Copyright 2023 Bennett, Coleman & Co. Ltd. All rights reserved. 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 comp against IDFA was very difficult in Q1 and will again be difficult in q2. A Division of NBCUniversal. They are people with families and kids to support. 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. Published Jan 7, 2021 6:11AM EST A ltimeter Growth Corp. 2, the second blank check company formed by Altimeter Capital targeting the tech sector, raised $400 million by offering 40 million. We did not see this talk of 10 rate hikes and we certainly didn't see a war developing in Europe. There is no doubt that doubling annual FCF will improve share price. We can just go through the list, Uber, Facebook, Roblox. 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. When you look at these questions, it comes down to this. In the back half, you've already lapped IDFA, in the back half of this year, the supply chain issues begin to ameliorate. Data is a real-time snapshot *Data is delayed at least 15 minutes. Meta shareholder Altimeter urges Facebook parent to cut down jobs, expenses 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. And I appreciate you being with me on the very first "Overtime" show. My bet is we're gonna have less this year. WAPNER: Man, I love how honest you are and I know our viewers do as well. 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. ISDA is a registered trademark of the International Swaps and Derivatives Association, Inc. But the company's dreams have fallen short as the Reality Labs unit, which works on augmented and virtual reality, has continuously reported staggering losses. Nobody debates whether or not this company is going to be more valuable in the future. 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. Can they maintain their growth momentum? Choose your reason below and click on the Report button. The metaverse is a shared virtual environment with aspects of online gaming, augmented reality, and more that people can access via the Internet. Got a confidential news tip? Altimeter Capital Management LP Info Size ($ in 1000's) At 12/31/2022: $3,652,571 At 09/30/2022: $4,676,285 Altimeter Capital Management LP holdings changes, total fund size, and other information presented on HoldingsChannel.com was derived from Altimeter Capital Management LP 13F filings. Meta Slashes Prices for VR Headsets You would simply do R&D quietly and investors would focus on the core business and the breakthroughs in AI. The stock today hit a new low under $3. ET on GuruFocus.com Builders Union LLP Buys AppLovin Corp, Match. Ranked #76 out of 483 Hedge Fund Managers. Will His AI Plans Be Any Different? 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 they do it, I think the stock can be up over 50% between now and the end of the year.