With the gains posted on March 3, Meta Platforms shares are up 54% this year. And we've had government intervention of the magnitude. At the end of the second quarter this year, Altimeter Capital held more than 2 million shares of Meta. On Oct. 11, Meta announced a new high-end VR headset, the Quest Pro. Even excluding its large metaverse investment, Meta has gone from $15B in annual capex in 2018, 2019, and 2020 to $30B in annual capex in 2022. There is no doubt that doubling annual FCF will improve share price. Grab Reportedly Set to List in US Via SPAC Merger at $35 Billion Valuation Right if the Fed raises rates 10 or 12 times given the demand destruction and the slowdown already underway in this country, we will be in a big recession come fall. Meta didn't immediately respond to a request for comment. So, its with some hesitation, but significant conviction, I am sharing an open letter strongly encouraging Meta to streamline and focus its path forward. I think that this is a business that is investing in the right things. 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. 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. Q1 2021: 13 Largest Global Startup Funding Rounds - AlleyWatch 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. H1 Raises $100M Series C to Expand Footprint, Make H1 the 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. We know Meta has more reach, more relevance, and more incredible opportunities for growth than almost any platform on the planet. It's our largest position in the book. Protocol: Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. 2023 CNBC LLC. Brad Gerstner's Altimeter Capital has an $8B profit on Snowflake. A new If Meta was able to control those costs, he said, then it could double its free cash flow and improve its share price. BRAD GERSTNER: Hey, Scott, thanks for having me. As you know we entered the year with a big bond short, we've now covered that bond short because we don't think that it's possible for the Fed to raise rates 7,10, 12 times as some people think this year. But I do believe that this company like the others that we talked about is going to be worth more in the future supported by real free cash flow. As between each other Adhering Party and us, the amendments in the Appendices to the Protocol shall apply to each Protocol Covered Agreement to which we are a party in accordance with the terms of the Protocol and this Adherence Letter. What is the metaverse and why are billions of dollars being spent on it? GERSTNER: Scott, I love that you asked the question. Meta has also been feeling pressure to improve the finances of its Reality Labs, the company's metaverseunit, which includes the VR headsets. Meta. 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. However, there are few signs that VR or some of the company's metaverse apps, such as Horizon Worlds, are catching on with the public beyond early adopters. Our Standards: The Thomson Reuters Trust Principles. 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Ranked #76 out of 483 Hedge Fund Managers. And notably, this decline in share price mirrors the lost confidence in the company, not just the bad mood of the market. That's what makes markets. Can it possibly be worth 100 billion? Altimeter.com is Altimeter's only website. 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. 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. Unlock your 30 days free access to ETPrime now. Updated on September 30, 2022. 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. WAPNER: Let me lastly ask you about Grab, the SPAC deal you did, biggest SPAC deal ever of $40 billion. 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. Brad Gerstner founded the. See here for a complete list of exchanges and delays. This lack of focus and fitness is obscured when growth is easy but deadly when growth slows and technology changes. Sincerely, You do, you do great work, excited for the new show and let's stay after it. We're down on the year. Gordon Bethune, former CEO of Continental Airlines; board member of Honeywell, Prudential Financial, and Sprint; Please refer to the section on cookies in our Website Privacy Policy If you click the "Accept" button, you consent to the use of cookies on our website. So I am very unhappy because I've lost money on the deal. An estimated $100B+ investment in an unknown future is super-sized and terrifying, even by Silicon Valley standards. 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's nominees are: Altimeter Capital Management LP Top Holdings 13F Filings Altimeter Capital's Brad Gerstner calls on Meta to slash headcount It's a better version of Zoom. They may never get back to the levels at which they traded before. 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 Right? As such, we would encourage the company to move aggressively and cut at least 20% of employee-related expenses by January 1, 2023. 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. At the same time that Meta ramped up spend, you lost the confidence of investors. 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. We have no stimulus checks. When you visit the site, Dotdash Meredith and its partners may store or retrieve information on your browser, mostly in the form of cookies. 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%. We certainly are neither short-term traders nor activists. You would simply do R&D quietly and investors would focus on the core business and the breakthroughs in AI. Altimeter Capital's Brad Gerstner Issues Open Letter to Meta (META) and 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. Altimeter Growth Corp. raised $450 million in an October 2020 IPO. 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? We dont have any demands. But the fact of the matter is the entire market has evaporated around these types of stocks. 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. Top 10 Stocks Held By Altimeter Capital Management LP 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). With all of this said, we truly believe that the company should be making some of these important investments. 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. The Wall Street Journal reported on Thursday that Grab was in talks with Altimeter. We know they have high EBITDA margins on the rideshare business which is dominant across the region. It's 3 trillion, right? Stock Radar: 19% from Budget Day! 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. The company has lost investor confidence as it ramped up spending and pivoted to the metaverse, the technology-focused hedge fund with a 0.1% stake said, and suggested a three-step plan. Altimeter Capital Management, LLC a Portfolio Activity as reported in the most recent 13F form published on Dec 31, 2022. 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. We did not see this talk of 10 rate hikes and we certainly didn't see a war developing in Europe. Right. Meta. 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. 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. Over the last three years, Meta has also dramatically increased its capital expenses. 15 Grab's SPAC Vehicle Altimeter Near Record Low After 28% Dive Your P/E ratio has fallen from 23x to 12x and now trades at less than half the average P/E of your peers. +Includes DocuBay and TimesPrime Membership. Altimeter Capital - Wikipedia Altimeter Capital owns about 2.46 million Meta shares. Accept. Are you as optimistic today as you were in months past? 2-Year You know, I told people at the time that, you know, there's risk in making these investments, right, we're shareholders of this, we've lost capital. 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. Menlo Park, CA 94025 (650) 549-9145 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies: . Days Trial 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 . With Snowflake, the question as to whether or not that business is going to compound, I think is not one that many people will debate. Altimeter Capital is in talks with ride-hailing company Grab to bring the company public in a $40 billion deal, according to a report from The Wall Street Journal. And Meta certainly has abundant financial resources to invest and / or return to shareholders. 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. I'm not a seller. Altimeter LLC. 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. 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. We do not take job reductions lightly. With all of that said, we believe the company can responsibly and reasonably reign in capex while continuing to invest aggressively in AI and other critical areas. But 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. Airline Industry Veteran Gordon Bethune Leads Stockholder-Nominated 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. 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. It said Grab is expected to raise between. 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. Investors Who Put $2 Billion Into FTX Face Scrutiny, Too committed hundreds of millions of dollars to Sequoia Capital, Altimeter Capital Management and Multicoin . I have deep respect and admiration for founders that continue to grind, inspire, and invent long after the financial motivation is gone. At the same time that Meta ramped up spend, you lost the confidence of investors. We were about 30% to 40% depending upon which basket you looked at software internet above the five-year average. 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. Altimeter Capital Company Profile | Management and Employees List Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. 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. The changes for the Quest 2 begin Sunday, March 5. Benzinga does not provide investment advice. Brad Gerstner is the Founder & Chief Executive Officer at Altimeter Capital based in Boston, Massachusetts. Background [ edit] In 2008, Brad Gerstner founded Altimeter Capital in Boston, Massachusetts. They were buying goods, soccer balls on DICK's Sporting Goods and candles on Williams Sonoma. Those decisions include slashing expenditure and reducing headcount, the CEO of Altimeter Capital told Meta founder Mark Zuckerberg in an open letter. AGCUU went public at $10 on Oct. 1, and closed Tuesday at $11.80. Altimeter Capital Management, LP - International Swaps and Derivatives ISDA fosters safe and efficient derivatives markets to facilitate GERSTNER: Right, it comes down fundamentally to a question Scott of whether you think we're gonna have more than eight rate increases or less. 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. It's also a vote of less confidence about the company's ambitions in the world of virtual and augmented reality. Drew Angerer | Getty Images News | Getty Images, Meta needs to focus on its core business, not the Metaverse, says Sand Hill's Brenda Vingiello. Bill Ackman's: Pershing Square Capital Management. Australian Gold & Copper Ltd. - MarketWatch In fact, our internet stock index is at a 10-year low and software is back nearly where we were in 2016 before the rerating of software occurred. My bet is we're gonna have less this year. Musk Made a Mess at Twitter. The Meta investor recommends a plan to get the company's "mojo back.". This is a hard game. Altimeter Capital Management is an investment firm that operates within the technology sector. 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." 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. Altimeter Capital Management, ISDA 2021 SBS Top-Up Protocol - Adherence. Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts. Instead, they grew at 106%. And so that will be rolled out in Q2 and Q3. PAR Capital Management, Inc. Do Not Sell My Personal Data/Privacy Policy. All rights reserved. PLAN, Yearly I think, or inflation, I think they're behind the curve on recession. 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. We know Meta has more reach, more relevance, and more incredible opportunities for growth than almost any platform on the planet. It has 24 billion in free cash they're going to generate this year. Get this delivered to your inbox, and more info about our products and services. We've destroyed over $15 trillion of stock market wealth. Altimeter SPAC Taking Grab Public | PYMNTS.com I mean, two years ago we were we were having this conversation. Can it possibly be worth a trillion? So these are different order of magnitude bets. See here for a complete list of exchanges and delays. The social media company had in June cut plans to hire engineers by at least 30%, with Zuckerberg warning employees to brace for an economic downturn.

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