Meta Platforms, which is set to report third-quarter results on Wednesday after markets close, declined to comment. 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. This company is perfectly positioned to capitalize on that they have the, the ad network to monetize it. Why 20%? WAPNER: Okay, that's a that's a big a bold call. Of course, a company that connects nearly three billion users on phone and text must be investing in the next generation of communication. Recently Active; Top Discussions; Best Content; WSO Media; BY INDUSTRY; Investment Banking Some companies require tremendous capex investment to maintain their existing business. So we believe not only you're going to get dramatically accelerated earnings, right, we think they're going to be a little bit more cautious about how they're spending those meta investment dollars, how they're spending dollars across the business. 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. Altimeter and PAR believe these experienced professionals can bring meaningful experience, objective oversight, and powerful change to United. Ultimately, Gerstner said, Meta has too many people and is spending too much on capital expenditures. 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. 3,30,700 crore) if it cut headcount by at least 20 percent, trimmed capital expenditure by at least $5 billion (roughly Rs. It can do that by making. 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. This would double annual FCF and put FCF as a percentage of revenue more in line with Google, Microsoft, and Apple. 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. 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. This is a hard game. What's going to be the inflation print in April? Some companies require tremendous capex investment to maintain their existing business. This is expected to facilitate trade as the West ratchets up sanctions on Russia. FTX's list of investors spans powerful and well-known investment firms: NEA, IVP, Iconiq Capital, Third Point Ventures, Tiger Global, Altimeter Capital Management, Lux Capital, Mayfield,. I think that this is a business that is investing in the right things. 2023 CNBC LLC. GERSTNER: So, Scott that you know the top six names in our book are all companies that we believe are, you know, both accelerating, expanding margins, expanding free cash flow margins, right, and that are critically important and will be worth more in the future. Consumer confidence is plummeting. Right? 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. 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 . Days Trial. Our best guess is that maintenance capex for Meta is less than $10B annually. FTX, once the third-largest centralized cryptocurrency exchange, is now in U.S. bankruptcy. So take Snowflake as an example. United has an Underqualified, Ineffective, and Entrenched Board: While presiding over United's stunning long-term underperformance, we believe that the incumbent Board (and a majority of the newly-expanded 15-person Board): (1) lacks sufficient leadership, expertise, and experience to challenge management and hold management accountable, to direct an operational and financial turn-around, and to maximize stockholder value; (2) has entrenched itself by implementing various mechanisms to financially penalize stockholders for making meaningful Board changes; (3) has failed to adequately align management compensation with stockholder interests; and (4) is too stale to effectively represent stockholders. It's a better version of Messenger. Their last reported 13F filing for Q4 2022 included $3,652,571,000 in managed 13F securities and a top 10 holdings concentration of 99.95%. WAPNER: Let me lastly ask you about Grab, the SPAC deal you did, biggest SPAC deal ever of $40 billion. So listen, I'm not happy about it. Altimeter Capital Management, LP And frankly, they weren't a very good hedge because bonds haven't moved all that much but gross stocks are down 60, 70, as you mentioned, down over 80%. But admittedly, you know, nights like tonight we'll we'll get we'll catch a little less sleep. committed hundreds of millions of dollars to Sequoia Capital, Altimeter Capital Management and Multicoin . We agree to pay a one-time fee of $500 to ISDA at or before the submission of this Adherence Letter. 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 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. 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. It can do great this, the business can be incredible. GERSTNER: So let's talk for a second about what I called. And notably, this decline in share price mirrors the lost confidence in the company, not just the bad mood of the market. But what is the right amount? At the start of COVID on March 26th when I felt about like I do today, growth stocks were under assault. 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. Welcome to "Overtime.". We did not see this talk of 10 rate hikes and we certainly didn't see a war developing in Europe. Brenda Yester Baty, Head of Strategic Initiatives at Lennar Corp.; former SVP Revenue Management at Carnival Cruise Lines. Nobody debates whether or not this company is going to be more valuable in the future. At the end of the second quarter this year, Altimeter Capital held more than 2 million shares of Meta. A letter addressed to Zuckerberg and the board of directors was published on Oct. 24. With all of this said, we truly believe that the company should be making some of these important investments. No matter how a company came public in 2021, let alone December of 2021, right, they've been obliterated. Further strengthening our own conclusions, your seemingly desperate actions yesterday appear as a transparent and cynical attempt to maintain your official privileges and power, despite your long historical record of deficient oversight on behalf of stockholders. So no, these issues are rea,l what's going on in Russia is real, what's going on in Europe is real. 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. Meta changed its company name from Facebook. 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. What do you think? 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. "Meta Reports Fourth Quarter and Full Year 2022 Results," Page 10. I mean, we're talking about billions of dollars in revenue but you left that out. Today, the cost of capital has radically changed, and so has Metas growth rate. 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. The last 10 years have been a unique time in tech and for Meta. 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. To read full story, subscribe to ET Prime, Billed annually at As a result, the team hastily pivoted the company toward the metaverse including a surprise re-naming of the company to Meta. Mark Zuckerberg is a self-made billionaire and the CEO of Meta (formerly Facebook), which he co-founded in his dorm room in 2004. 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. 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. The facts are startling. Background [ edit] In 2008, Brad Gerstner founded Altimeter Capital in Boston, Massachusetts. As such, we would encourage the company to move aggressively and cut at least 20% of employee-related expenses by January 1, 2023. Brad Gerstner is the Founder & Chief Executive Officer at Altimeter Capital based in Boston, Massachusetts. I think we spent about an hour together. Altimeter Capital. Altimeter said annual free cash flow can be doubled to $40 billion (roughly Rs. 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. Adani Group on Thursday said US-based boutique investment firm GQG Partners has picked up equity stakes worth $1.87 billion (15,446 crore) in four listed group companies Adani Ports and Special Economic Zone, Adani Green Energy, Adani Transmission and flagship Adani Enterprises via secondary share sales. At $20-$25B of annual capex, Meta will still be investing market leading amounts to help invent the future of AI. Altimeter was founded in 2008 and is headquartered out of Boston, Massachusetts. Oct 24 (Reuters) - Facebook-parent Meta Platforms Inc (META.O) needs to streamline by cutting jobs and capital expenditure, its shareholder Altimeter Capital Management said on Monday in an open letter to Chief Executive Mark Zuckerberg. for a description of how we use cookies. And so, for our LPs, the bet is simple. When you were with me in December, you said that you had picked some more of that up along with Snowflake. In fact, we believe that augmented and artificial intelligence has the potential to drive more economic productivity than the internet itself. 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. In Q1 of 2021, everybody was sitting on their couch. The same is true for Microsoft, right? HONG KONG (AP) 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 . 233 South Wacker Drive 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. 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. He defied expectations and made profits on Priceline, Expedia, Uber, Twilio, and Hubspot. Privacy Policy, ISDA uses cookies to enhance your experience on our website. What is the Fed going to do? If you look at, if you look at, you know, what we expect to occur over the rest of the year, this stock will compound as it continues to beat earnings, as it continues to expand its use cases, even without multiples expanding, right, as investors begin to look at those higher numbers in '23 and '24. Congrats on the new show. 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. We believe that our conclusion is shared by many of United's long-suffering stockholders, customers, and 80,000+ dedicated employees. International Swaps and Derivatives Association. They are people with families and kids to support. 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. WAPNER: Speaking of going higher up, you see what interest rates are doing today after sitting in a tight spot, they've started to move to 11. 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. I have deep respect and admiration for founders that continue to grind, inspire, and invent long after the financial motivation is gone. They were buying goods, soccer balls on DICK's Sporting Goods and candles on Williams Sonoma. 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My bet is we're gonna have less this year. Contact. That's what makes markets. At Meta, the number of employees is up over 3x from 25k to 85k employees in just the last four years! 2499 1749, Monthly So we're in the neighborhood of a tradable bottom. It's our largest position in the book. This will alert our moderators to take action. The purpose of this letter is to confirm our adherence as a Protocol Participant to the ISDA 2021 SBS Top-Up Protocol Agreement as published by the International Swaps and Derivatives Association, Inc. on February 25, 2021 (the Protocol Agreement). 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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. 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. It lost $5.8 billion in the first six months of the year. Revenue. 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. 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. 2023 Benzinga.com. We also reference original research from other reputable publishers where appropriate. We do not take job reductions lightly. August 2012 Protocol ALID: 66703 Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. . 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. With the gains posted on March 3, Meta Platforms shares are up 54% this year. 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. 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. We are generally patient investors. And I've let the company know that, right? b***@altimeter.com. 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. So I am very unhappy because I've lost money on the deal. I don't think there's any chance that the Fed is going to raise rates 10 times this year. All rights reserved. We also believe Metas investment in AI will lead to exciting and important new products that can be cross-sold to billions of customers. "If the company were investing $1-2B per year into this project, then that confusion might not even be a problem.". 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 partner Chris Conforti plans to leave the investment firm, according to people with knowledge of the matter. And I think they have to execute against the underlying operations in the business. 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. CAPEX Investing Aggressively and Responsibly in the Future of AI. I think the only debate is what is the multiple going to be in three months, in six months, in nine months. Getting Fit Headcount Reduction / Expense Control. To set a new and better course for the Company, and to give United stockholders the opportunity to elect the Board they deserve, Altimeter has delivered to you a notice today indicating its intention to nominate six highly qualified professionals led by former Continental Airlines CEO Gordon Bethune to the United Board at the 2016 annual stockholder meeting. All of China internet down over 80%. 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. 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. After all, why not hire more people and invest in more things when the cost of capital was near zero and growth seemed unlimited? 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. Ranked #76 out of 483 Hedge Fund Managers. 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. Before we we move, what do I do with Facebook? 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. 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. Those decisions include slashing expenditure and reducing headcount, the CEO of Altimeter Capital told Meta founder Mark Zuckerberg in an open letter. What am I supposed to think about that? 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. Worse, this skepticism seemed to be affirmed with a nearly-immediate and sizable miss in financial results and continued under-performance throughout 2022. If you look at the company, it's now trading at $5 billion enterprise value. Are you as optimistic today as you were in months past? When exactly did you determine that the Board was so inadequate as to need four new directors, all at once, and without an annual meeting or a stockholder vote? SPACs notched more than $70 billion so far in 2021, a new record. 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. We dont have any demands. While the increased AI investment was clearly well timed, Metas investment in the metaverse, while smaller than the AI investment, has gotten the most attention and has led to much confusion. Rodney O'Neal, former CEO of Delphi Automotive; former board member of Delphi Automotive, Sprint, and Goodyear; The metaverse is a shared virtual environment with aspects of online gaming, augmented reality, and more that people can access via the Internet. Prior to Octahedron, Ram was a partner and portfolio manager at Altimeter Capital, a multi-billion dollar investment firm . Altimeter Capital Management is a technology focused investment firm based in Menlo Park, CA and Boston, MA. PAR Capital Management, Inc. Do Not Sell My Personal Data/Privacy Policy. Altimeter.com is Altimeter's only website. You do, you do great work, excited for the new show and let's stay after it. "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. Right? The full text of the stockholder letter to the United Board follows: March 8, 2016. PLAN.
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