This would double annual FCF and put FCF as a percentage of revenue more in line with Google, Microsoft, and Apple. 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. click here! 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. Meta stock is down over 61% in 2022. 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. QUARTERLY LETTER 2022 | Vol.1 1345 AVENUE OF THE AMERICA S 33RDFLOOR NEW YORK, NY 10105 HAYDENCAPITAL.COM HAYDEN CAPITAL 2 May 20, 2022 Dear Partners and Friends, The last six months have been extremely painful - by far, the worst period since we started Hayden. The conventional wisdom press and investor is that the core business hit a wall last fall. I imagine they're going to be super aggressive about how they're buying back shares. "In addition, people are confused by what the metaverse even means," Gerstner wrote. 2499 1749, Monthly United Continental Holdings, Inc. With that said, we have a shortage of talent in Silicon Valley. In fact, we distributed over $6 billion worth of Snowflake to our venture investors last year. Meta and other large companies have made it very difficult for start-ups to hire. Sign up for free newsletters and get more CNBC delivered to your inbox. "Meta Reports Fourth Quarter and Full Year 2022 Results," Page 10. Chicago, IL 60606 Brad Gerstner is the Founder & Chief Executive Officer at Altimeter Capital based in Boston, Massachusetts. According to Hedge Follow, it was authored by Brad Gerstner, CEO and founder of technology investment firm Altimeter Capital. CAPEX Investing Aggressively and Responsibly in the Future of AI. This would double annual FCF and put FCF as a percentage of revenue more in line with Google, Microsoft, and Apple. Based on yesterday's announcement, it seems the Board now agrees that for many years it operated with a suboptimal composition. 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. Some companies require tremendous capex investment to maintain their existing business. 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. 3,30,700 crore) if it cut headcount by at least 20 percent, trimmed capital expenditure by at least $5 billion (roughly Rs. Musk Made a Mess at Twitter. The metaverse is a shared virtual environment with aspects of online gaming, augmented reality, and more that people can access via the Internet. As a result, the team hastily pivoted the company toward the metaverse including a surprise re-naming of the company to Meta. These are not numbers on a spreadsheet. 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. Sign Up. The facts are startling. We were wrong. 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. About Kevin Wang. This is a company that only did 1.2 billion in revenue last year. 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. Its competitor or not its competitor, its closest comp in Southeast Asia Sea Limited is also down over 70%. All of China internet down over 80%. We had given most of that up by middle of December. Can it possibly be worth a trillion? Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. Altimeter was founded in 2008 and is headquartered out of Boston, Massachusetts. We certainly our base case, as you know, was a soft landing four to five rate hikes into this year. Credit Derivatives Determinations Committees, how to enable Or it's well over a trillion, Microsoft 3 trillion. That's what makes markets. There is no doubt that doubling annual FCF will improve share price. . Altimeter's nominees are: My bet is we're gonna have less this year. In the back half, you've already lapped IDFA, in the back half of this year, the supply chain issues begin to ameliorate. And I think they have to execute against the underlying operations in the business. Unlock your 30 days free access to ETPrime now. 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. I have been told that Amazon spent far less in total to build AWS. Our best guess is that maintenance capex for Meta is less than $10B annually. This is a leading internet company in Southeast Asia. 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. ", 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%. Tina Sharkey, CEO of SherpaFoundry; former board member of HomeAway; and So were Shopify's and so were PayPal. How many dogs want to eat the dog food? The firm also considers investments in the consumer products and services, gaming, retail, and transportation sectors. Altimeter Capital Management LLC. "New Prices for Meta Quest 2s 256GB SKU + Meta Quest Pro. We simply wanted to further engage and continue sharing our thoughts as an interested shareholder. 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. In Q1 of 2021, everybody was sitting on their couch. And I've let the company know that, right? 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. Altimeter Capital Management partner Chris Conforti plans to leave the investment firm, according to people with knowledge of the matter. Limit investment in metaverse / Reality Labs to no more than $5B per year. This is a hard game. 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. I don't think they can. They are people with families and kids to support. 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. 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. 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 . Where's your exposure today? Altimeter said such huge investments "in an unknown future is super-sized and terrifying, even by Silicon Valley standards". 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. Form of Letter Agreement between the Registrant, the Sponsor and each director and executive officer of the Registrant. Altimeter said annual free cash flow can be doubled to $40 billion (roughly Rs. AGCUU went public at $10 on Oct. 1, and closed Tuesday at $11.80. We can just go through the list, Uber, Facebook, Roblox. How big are the margins, ultimately Snowflake will be worth a lot more because there is almost endless demand for the product and this is a business that is highly profitable. It's good to see you again. About Altimeter Capital Altimeter is a global investment firm managing both public and private funds focused on the airline, travel, technology, internet, software, and consumer sectors. The firm's private equity arm makes all-stage venture capital investments, primarily in the technology sector. committed hundreds of millions of dollars to Sequoia Capital, Altimeter Capital Management and Multicoin . Despite public skepticism at times warranted we have been supporters The stock is 51% off of its high. The offers that appear in this table are from partnerships from which Investopedia receives compensation. What do you think? If the company were investing $12B per year into this project, then that confusion might not even be a problem. I don't think the Fed is going to throw away two years' worth of work to try to avoid a recession in a election year and run us straight into the teeth of a recession while we're trying to fight a war in Europe. Founder & Chief Executive Officer at Altimeter Capital . You know how to time markets. At Meta, the number of employees is up over 3x from 25k to 85k employees in just the last four years! Email. And notably, this decline in share price mirrors the lost confidence in the company, not just the bad mood of the market. We think this is a 3X in three years even if software multiples remain at these levels near the five-year average. He said a 20% cut in employee spending would take Meta back to the levels of staffing it had last year and argued that the company can't spend as it used to since the cost of capital and interest rates have risen recently. Altimeter Capital is an American investment firm based in Boston, Massachusetts and Menlo Park, California. effective risk management for all users of derivative products. The comp against IDFA was very difficult in Q1 and will again be difficult in q2. Bruce Berkowitz's: Fairholme Capital Management. He also asked Zuckerberg to cut down on capex and employee expenses. Altimeter Capital Management, LP Buys Opendoor Technologies Inc, Toast Inc, Duolingo Inc, Sells . So listen, I'm not happy about it. Is it close to being done? Do they want to stand with me and ride that out? At first glance, the rules of English capitalization seem simple. Congrats on the new show. So no, these issues are rea,l what's going on in Russia is real, what's going on in Europe is real. 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. Can it possibly be worth 100 billion? Conclusion A Leaner, Faster, More Successful Meta. Data is a real-time snapshot *Data is delayed at least 15 minutes. We have not made this difficult decision lightly, but after thorough, serious, and objective analysis, we feel compelled to act. 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. Will His AI Plans Be Any Different? 2,06,700 crore) a year and capped annual investment in the metaverse to $5 billion (roughly Rs . 2023 CNBC LLC. Days Trial Some companies require tremendous capex investment to maintain their existing business. 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. 2550 Sand Hill Road, Suite 150. There is no doubt that doubling annual FCF will improve share price. Facebook's revenues in Q1 were lower than people expected. 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. GERSTNER: No, I didn't leave it out. Can they maintain their growth momentum? It lost $5.8 billion in the first six months of the year. We did not see this talk of 10 rate hikes and we certainly didn't see a war developing in Europe. Consumer confidence is plummeting. 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 . Conclusion A Leaner, Faster, More Successful Meta. What is the connection between those three companies. Skip to main content. United Urgently Needs a Course Correction: United's stockholders, customers, and employees deserve better Board governance, better Board leadership, and better Board performance. So these are different order of magnitude bets. [2] The firm focuses on technology investments in both public and private markets globally. Altimeter Capital launched its two SPACs in October and January, raising a combined $850 million between the two blank-check vehicles. 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. Get this delivered to your inbox, and more info about our products and services. Warren Buffett's: Berkshire Hathaway. Hedge Fund Manager. Meta Platforms (META) shares jumped 6% after the tech giantannouncedbig price cuts for its virtual reality (VR) headsets. Mar 11, 2021 3:07 PM EST. Panel led by former SC judge to include NaBFID chair KV Kamath and Infys Nandan Nilekani. I'm not a seller. Your P/E ratio has fallen from 23x to 12x and now trades at less than half the average P/E of your peers. We have $130 oil and $6 gas at the pump. 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. You would simply do R&D quietly and investors would focus on the core business and the breakthroughs in AI. 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 annual investment in the metaverse to $5 billion instead of the current $10 billion. I think we spent about an hour together. 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 . 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 It was being purchased on the Shopify platform and people were using PayPal to check out. Choose your reason below and click on the Report button. Altimeter Capital Management is an investment firm with offices in Menlo Park, CA, and Boston, MA. Over time, we intend to share with United's stockholders our detailed analysis, which has led us to conclude, among other things, that: With all of this said, we truly believe that the company should be making some of these important investments. Altimeter Capital Management partner Chris Conforti plans to leave the investment firm, according to people with knowledge of the matter. Ro $500.0M. The silver lining is that unlike many companies, this popular narrative obscures the truth. 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. I don't think Mark did a particularly good job of explaining the meta investments. 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. 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. I can't tell you what's going to happen the next three days or the next three weeks or even three months. And so we add on a fair amount of exposures we entered this year. 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. Neither Altimeter, nor any of its affiliates or personnel, offers investment advisory services via the internet. So we're in the neighborhood of a tradable bottom. Contact. International Swaps and Derivatives Association. 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? 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. What am I supposed to think about that? As such, we would encourage the company to move aggressively and cut at least 20% of employee-related expenses by January 1, 2023. How many increases? Meta shares moved 6% higher following the announcement. 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. 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. That stuff was being advertised on Instagram. 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. You probably know you should capitalize proper nouns and the first word of every sentence. WAPNER: Man, I love how honest you are and I know our viewers do as well. Are you as optimistic today as you were in months past? 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. Your Reason has been Reported to the admin. Brad, thank you. Capital October 20, 2022 Risk & Capital. It's our largest position in the book. This is a business it's trading at 12 times free cash flow, X the meta investment and 18 times including. He joins me live. At the start of COVID on March 26th when I felt about like I do today, growth stocks were under assault. 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. 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. It's interesting that now today you say we're in the neighborhood of a tradable bottom. 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. The silver lining is that unlike many companies, this popular narrative obscures the truth. Meta reported in February that Reality Labs lost $13.72 billion in 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. After the pandemic, hospitals are now on a strong footing. Sign up for free newsletters and get more CNBC delivered to your inbox. And Meta certainly has abundant financial resources to invest and / or return to shareholders. Protocol: It added that VR is "a powerful social platform and creative technology, and the more people with access to it, the better. Altimeter and PAR believe these experienced professionals can bring meaningful experience, objective oversight, and powerful change to United. +Includes DocuBay and TimesPrime Membership. The stock today hit a new low under $3. Focusing the Metaverse: the Next Generation of Communication and Collaboration. These include white papers, government data, original reporting, and interviews with industry experts. The letter is the latest sign that Meta investors are starting to express reservations about the company's recent performance. This lack of focus and fitness is obscured when growth is easy but deadly when growth slows and technology changes. 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. We want to hear from you. 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. I think they have to take a look at their capital allocation plan. Brad Gerstner effective risk management for all users of derivative products. Getting Fit Headcount Reduction / Expense Control. . c/o Chairman Henry L. Meyer III 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. Of course, a company that connects nearly three billion users on phone and text must be investing in the next generation of communication. CAPEX Investing Aggressively and Responsibly in the Future of AI. I have deep respect and admiration for founders that continue to grind, inspire, and invent long after the financial motivation is gone. We want to hear from you. Louis Bacon's: Moore Capital Management. Chief Executive Officer 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.
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