41,300 crore) to $25 billion (roughly Rs. I think that this is a business that is investing in the right things. Are you as optimistic today as you were in months past? committed hundreds of millions of dollars to Sequoia Capital, Altimeter Capital Management and Multicoin . So we're in the neighborhood of a tradable bottom. 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. ISDA fosters safe and efficient derivatives markets to facilitate Ranked #76 out of 483 Hedge Fund Managers. So were Shopify's and so were PayPal. WAPNER: I hear you. Facebook parent Meta Platforms (META) announced that it would reduce selling prices for its Quest virtual reality (VR) headsets. We know Meta has more reach, more relevance, and more incredible opportunities for growth than almost any platform on the planet. With all of this said, we truly believe that the company should be making some of these important investments. Kultura Capital Management is being structured as a hybrid fund that will focus on late-stage tech startups as well as public companies, the person said. 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. The answer to that is because people are very fearful. 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. Meta CTO Andrew Bosworth writes Facebook of old had focus in blog post 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. Portfolio Gain +273.45%. Some companies require tremendous capex investment to maintain their existing business. WAPNER: We're back now with Altimeter Capital's Brad Gerstner hanging out with us at "Overtime" today, You know, we talked about the magnitude Brad by which some of these stocks have come down and I'm looking at the, listen, it's not just Meta, obviously. All of China internet down over 80%. The conventional wisdom press and investor is that the core business hit a wall last fall. An estimated $100B+ investment in an unknown future is super-sized and terrifying, even by Silicon Valley standards. A Division of NBCUniversal. Neither Altimeter, nor any of its affiliates or personnel, offers investment advisory services via the internet. 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. Rates are going up and we have a war. It's been a big drawdown this year. There is no doubt that doubling annual FCF will improve share price. Altimeter Capital Management, LP Buys Opendoor Technologies Inc, Toast Inc, Duolingo Inc, Sells . If you click the "Accept" button, you consent to the use of cookies on our website. Please refer to the section on cookies in our Website Privacy Policy 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%. Investopedia does not include all offers available in the marketplace. Dont miss out on ET Prime stories! Choose your reason below and click on the Report button. JavaScript in your web browser. 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. Altimeter Capital launched its two SPACs in October and January, raising a combined $850 million between the two blank-check vehicles. Chase Coleman's: Tiger Global Management. 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. The bet . 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. Ultimately, we and the Board necessarily must share the same objective: maximizing long-term value creation for United's stockholders, customers, and employees. In an open letter to CEO Mark Zuckerberg on Monday, shareholder Altimeter Capital Management urged Meta Platforms Inc., the parent company of Facebook, to streamline by eliminating positions and capital expenditures. We think both of those are solvable. Meta and other large companies have made it very difficult for start-ups to hire. 2550 Sand Hill Road, Suite 150. We simply wanted to further engage and continue sharing our thoughts as an interested shareholder. 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. Get your daily dose of business updates on WhatsApp. I mean, two years ago we were we were having this conversation. 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. This is a company that only did 1.2 billion in revenue last year. Read More . Tina Sharkey, CEO of SherpaFoundry; former board member of HomeAway; and 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. Ro $500.0M. 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. On top of that we had supply chain challenges. We didn't think that was durable. Brad Gerstner's Altimeter Capital has an $8B profit on Snowflake. A new 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. Got a confidential news tip? The silver lining is that unlike many companies, this popular narrative obscures the truth. Popular Searches. 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. Right? It lost $5.8 billion in the first six months of the year. You do, you do great work, excited for the new show and let's stay after it. As I look at it, the market is now pricing in at least seven rate hikes. When you look at these questions, it comes down to this. Altimeter's second tech SPAC Altimeter Growth Corp. 2 files - Nasdaq FalconX Raises $210M Following 30x YoY Revenue Growth; Now Valued at $3 "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," Gerstner wrote. That stuff was being advertised on Instagram. To accomplish this goal, we recommend a three step plan that will double FCF to $40 B per year and focus the companys teams and investments: Getting Fit Headcount Reduction / Expense Control. Chris Conforti - Partner - Altimeter | LinkedIn Following is a link to video on CNBC.com: 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. But Meta needs to get its mojo back. 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. GERSTNER: No, I didn't leave it out. Today, the cost of capital has radically changed, and so has Metas growth rate. Brad, thank you. At the same time that Meta ramped up spend, you lost the confidence of investors. With the gains posted on March 3, Meta Platforms shares are up 54% this year. 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 Growth Corp. raised $450 million in an October 2020 IPO. Board of Directors You would simply do R&D quietly and investors would focus on the core business and the breakthroughs in AI. 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. The changes for the Quest 2 begin Sunday, March 5. How big is that market? With all of this said, we truly believe that the company should be making some of these important investments. This lack of focus and fitness is obscured when growth is easy but deadly when growth slows and technology changes. Meta shares moved 6% higher following the announcement. Focusing the Metaverse: the Next Generation of Communication and Collaboration. It's a better version of Messenger. Meta said the cost of the Quest 2 will drop $70 to $429.99, while the price of the higher-end Quest Pro will be slashed to $999.99 from $1,499.99. We've destroyed over $15 trillion of stock market wealth. It's also a vote of less confidence about the company's ambitions in the world of virtual and augmented reality. Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts. 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. What is the metaverse and why are billions of dollars being spent on it? 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. Meta shareholder wants Facebook parent to cut jobs, spending Southeast Asian Superapp Grab Could Set SPAC Record 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. Bruce Berkowitz's: Fairholme Capital Management. All Rights Reserved. At Meta, the number of employees is up over 3x from 25k to 85k employees in just the last four years! The firm's private equity arm makes all-stage venture capital investments, primarily in the technology sector. 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. Meta investor Altimeter Capital urges Mark Zuckerberg to slash jobs As such, we would encourage the company to move aggressively and cut at least 20% of employee-related expenses by January 1, 2023. I'm going to own these companies, there are a handful of select companies that are free cashflow positive that are going to be worth more in the future. Meta Platforms, which is set to report third-quarter results on Wednesday after markets close, declined to comment. Finally, Prudential PLC lifted its . +Includes DocuBay and TimesPrime Membership. Usually you don't capitalize after a colon, but there are exceptions. 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. All rights reserved. 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. What is the connection between those three companies. So these are different order of magnitude bets. Gordon Bethune, former CEO of Continental Airlines; board member of Honeywell, Prudential Financial, and Sprint; Metas core business is one of the largest and most profitable in the world with over $45 B in operating profits last year alone. 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. Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. I think, or inflation, I think they're behind the curve on recession. Of course, a company that connects nearly three billion users on phone and text must be investing in the next generation of communication. 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. Form of Letter Agreement between the Registrant, the Sponsor and each director and executive officer of the Registrant. 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. But I think if you have a time horizon over the course of the one to three years, we see a lot of stocks in our universe that we not only think are going to end the year higher, but we think are going to be multiples higher as we look out over the next two to three years. At the start of COVID on March 26th when I felt about like I do today, growth stocks were under assault. Contact. Got a confidential news tip? 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. It makes no sense to me, but that is the risk that you run. And, while most companies will struggle to monetize AI, we believe Meta is incredibly well positioned to leverage AI to make all of its existing products better. In the back half, you don't have those same comp issues that you have caused by COVID. Over time, we intend to share with United's stockholders our detailed analysis, which has led us to conclude, among other things, that: 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. 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. I said IDFA which is the Apple changes right? Meta stock is down over 61% in 2022. Meta layoffs 2022: Cut workforce, spending on metaverse, key investor 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. As you know, we are long-term shareholders. You probably know you should capitalize proper nouns and the first word of every sentence. As always, happy to connect with you and your team. And notably, this decline in share price mirrors the lost confidence in the company, not just the bad mood of the market. It can compound its earnings and this that and the other but I need to know can it get back to that level. Last fall, Brad Gerstner from Altimeter Capital published an open letter, telling Meta it has "lost the confidence of investors" and telling the company to throw in the towel on its metaverse project. Meta changed its company name from Facebook to better focus on its VR hardware and software and is spending $10 billion per year on the technology. Of course, a company that connects nearly three billion users on phone and text must be investing in the next generation of communication. 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. What do you think? This company is perfectly positioned to capitalize on that they have the, the ad network to monetize it. In Q1 of 2021, everybody was sitting on their couch. 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. We can just go through the list, Uber, Facebook, Roblox. Altimeter Capital Management, LLC - Brad Gerstner - TipRanks Why 20%? Conclusion A Leaner, Faster, More Successful Meta. At $20-$25B of annual capex, Meta will still be investing market leading amounts to help invent the future of AI. If the company were investing $12B per year into this project, then that confusion might not even be a problem. Rodney O'Neal, former CEO of Delphi Automotive; former board member of Delphi Automotive, Sprint, and Goodyear; United Stockholders Altimeter Capital and PAR Capital Express Altimeter Feb 2021 - Present2 years 2 months New York, United States Chris is a Partner at Altimeter on the private investing team where he focuses on investing in iconic late stage technology. Over the last three years, Meta has also dramatically increased its capital expenses. Superficial change in panicked response to rigorous scrutiny is hardly noble or a basis for stockholders to have confidence in your judgment. Meta didn't immediately respond to a request for comment. These include white papers, government data, original reporting, and interviews with industry experts. Altimeter Capital owns about 2.46 million Meta shares. Drew Angerer | Getty Images News | Getty Images, Meta needs to focus on its core business, not the Metaverse, says Sand Hill's Brenda Vingiello. March 2013 Protocol ALID: 66704. 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. 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. The facts are startling. Altimeter SPAC Has Reported $40 Billion Deal for Ride-Hail Company Grab 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. As a result, the team hastily pivoted the company toward the metaverse including a surprise re-naming of the company to Meta. And so that will be rolled out in Q2 and Q3. And I appreciate you being with me on the very first "Overtime" show. Board of Directors c/o Chairman Henry L. Meyer III United Continental Holdings, Inc. . We had given most of that up by middle of December. 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. ISDA fosters safe and efficient derivatives markets to facilitate effective risk management for all users of derivative products. And we've had government intervention of the magnitude. Welcome to "Overtime.". Cookies collect information about your preferences and your devices and are used to make the site work as you expect it to, to understand how you interact with the site, and to show advertisements that are targeted to your interests. It's our largest position in the book. 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 spent over 20 years investing behind some of the worlds great founders who are helping to invent the technologies that move the world forward. We have no stimulus checks. Despite public skepticism at times warranted we have been supporters It massively distorted multiples on the way in and it's massively distorting multiples on the way out. They are people with families and kids to support. But it's good to be here and and you know, while I think we we did see the normalization and multiples as a likely outcome toward the end of last year. Stock Radar: 19% from Budget Day! Brad Gerstner, Founder and CEO of Altimeter Capital; former board member of Orbitz Worldwide; Altimeter was founded in 2008 and is headquartered out of Boston, Massachusetts. Altimeter Capital Management LP Top Holdings 13F Filings At least one big investor is calling for Mark Zuckerberg to throw in Altimeter Capital Management partner Chris Conforti plans to leave the investment firm, according to people with knowledge of the matter. Why didn't you buy, you know, Uber at 28 bucks a share? So, it doesn't surprise me at all that buyers are on the sidelines and that sellers and short sellers are having a field day with stocks. He left GC and became co-CEO of NLG, an early online travel start-up purchased in part by IAC.He co-founded Openlist.com, a local search start up that was self-funded and sold to Marchex (Nasdaq: MCHX);He was a partner at PAR Capital, a multi-billion hedge. Hedge Fund - Altimeter Capital Management - Insider Monkey 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. Mark Zuckerberg is a self-made billionaire and the CEO of Meta (formerly Facebook), which he co-founded in his dorm room in 2004. Copyright 2023 Bennett, Coleman & Co. Ltd. All rights reserved. Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more! At the end of the second quarter this year, Altimeter Capital held more than 2 million shares of Meta. So no, these issues are rea,l what's going on in Russia is real, what's going on in Europe is real.
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