altimeter capital letter

The changes for the Quest 2 begin Sunday, March 5. At $20-$25B of annual capex, Meta will still be investing market leading amounts to help invent the future of AI. 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. 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. 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. There is no doubt that doubling annual FCF will improve share price. 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. It's down 32% in the last 11 months ,that ranks it in the top three of the last 20 years in terms of drawdowns. All Rights Reserved. Skip to main content. Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. 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. 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. In fact, in the most recent quarter, they added 1.4 billion of contracted value. It's good to see you again. An estimated $100B+ investment in an unknown future is super-sized and terrifying, even by Silicon Valley standards. Metas core business is one of the largest and most profitable in the world with over $45 B in operating profits last year alone. The bet . In short, Meta needs to get fit and focused. 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. Altimeter LLC. 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. Your P/E ratio has fallen from 23x to 12x and now trades at less than half the average P/E of your peers. You probably know you should capitalize proper nouns and the first word of every sentence. Meta (Facebook) Begins Biggest Layoffs in Company's History, Meta (META) Connect Conference Key Takeaways, Meta (Facebook) Shares Slammed as Earnings, Spending Disappoint. That was our baseline that we were going to have a relatively soft landing, three to four rate hikes. What is the Fed going to do? We dont have any demands. PLAN, Yearly See here for a complete list of exchanges and delays. 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. He said the money the company is currently spending to develop VR could add up for a decade before it comes to fruition. b***@altimeter.com. PAR Capital Management, Inc. Do Not Sell My Personal Data/Privacy Policy. 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. . Capitalizing on the fund's VC success, Gerstner raised $450M for Altimeter Growth Corp (AGCUU), a blank check company IPO targeting the tech sector. At first glance, the rules of English capitalization seem simple. 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. My bet is we're gonna have less this year. for a description of how we use cookies. Worse, this skepticism seemed to be affirmed with a nearly-immediate and sizable miss in financial results and continued under-performance throughout 2022. FREE Breaking News Alerts from StreetInsider.com! We agree to pay a one-time fee of $500 to ISDA at or before the submission of this Adherence Letter. Altimeter Capital owns approximately 0.11% of Meta. The deal values the combined company at $35 billion and will. We certainly our base case, as you know, was a soft landing four to five rate hikes into this year. Altimeter Capital Management LLC. 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. Can they maintain their growth momentum? Headquarters Location One International Place Suite 2400 Boston, Massachusetts, 02110, United States 617-310-6180 Suggest an edit 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. We want to hear from you. Consumer confidence is plummeting. I think we spent about an hour together. Sign Up. To put that in perspective, excluding your large metaverse investment, Meta is investing more in capex than Apple, Tesla, Twitter, Snap, and Uber combined! We also reference original research from other reputable publishers where appropriate. 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. 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. You can learn more about the standards we follow in producing accurate, unbiased content in our. ISDA fosters safe and efficient derivatives markets to facilitate effective risk management for all users of derivative products. The metaverse is a shared virtual environment with aspects of online gaming, augmented reality, and more that people can access via the Internet. Hedge Fund Manager. I don't think Mark did a particularly good job of explaining the meta investments. International Swaps and Derivatives Association. 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 they have to take a look at their capital allocation plan. Board of Directors c/o Chairman Henry L. Meyer III United Continental Holdings, Inc. . Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. Rodney O'Neal, former CEO of Delphi Automotive; former board member of Delphi Automotive, Sprint, and Goodyear; You would simply do R&D quietly and investors would focus on the core business and the breakthroughs in AI. 41,300 crore) to $25 billion (roughly Rs. 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 . 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. Over the last three years, Meta has also dramatically increased its capital expenses. They're fearful about the war. 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). 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. 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,. 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. Got a confidential news tip? This is a region of 700 million plus people. I imagine they're going to be super aggressive about how they're buying back shares. This company is perfectly positioned to capitalize on that they have the, the ad network to monetize it. "If the company were investing $1-2B per year into this project, then that confusion might not even be a problem.". The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs. 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. Our six nominees have the necessary skills, leadership abilities, and relevant experience to catalyze a United course change and to help the Company realize its immense potential. Menlo Park, CA 94025 (650) 549-9145 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies: . Conclusion A Leaner, Faster, More Successful Meta. Of course, a company that connects nearly three billion users on phone and text must be investing in the next generation of communication. Board of Directors This is a hard game. Focusing the Metaverse: the Next Generation of Communication and Collaboration. "In short, Meta needs to get fit and focused.". We did not see this talk of 10 rate hikes and we certainly didn't see a war developing in Europe. The last 10 years have been a unique time in tech and for Meta. The firm also considers investments in the consumer products and services, gaming, retail, and transportation sectors. Altimeter Growth Corp. raised $450 million in an October 2020 IPO. Drew Angerer | Getty Images News | Getty Images, Meta needs to focus on its core business, not the Metaverse, says Sand Hill's Brenda Vingiello. 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. A Division of NBCUniversal. Meta stock is down over 61% in 2022. There isnt a day that goes by where I dont find myself using Metas products to communicate, to connect, and to entertain still amazed at the power of these services. 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. Rates are going up and we have a war. I can't tell you what's going to happen the next three days or the next three weeks or even three months. March 8, 2016 We're down on the year. When you visit the site, Dotdash Meredith and its partners may store or retrieve information on your browser, mostly in the form of cookies. [3] Altimeter Capital Management is a hedge fund with 17 clients and discretionary assets under management (AUM) of $17,950,309,162 (Form ADV from 2022-05-27). I have been told that Amazon spent far less in total to build AWS. It's a better version of Messenger. Facebook's revenues in Q1 were lower than people expected. 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 mean, two years ago we were we were having this conversation. Before we we move, what do I do with Facebook? Enjoy a 7-Day Free Trial Thru Feb 17, 2023! 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 is focused on technology investment, and has found multi-billion-dollar success. Is it close to being done? Can it possibly be worth 100 billion? Think about this, Scott. 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. By any normal company or start up standard, $5 B per year would seem like an extraordinary amount. WAPNER: Okay, that's a that's a big a bold call. We simply wanted to further engage and continue sharing our thoughts as an interested shareholder. Instead, they grew at 106%. Grab Holdings is reportedly in talks to go public through a merger with a "blank check" company that could value the Southeast Asian ride-hailing startup at as much as . 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. I think the only debate is what is the multiple going to be in three months, in six months, in nine months. Facebook parent Meta Platforms (META) announced that it would reduce selling prices for its Quest virtual reality (VR) headsets. If you look at the company, it's now trading at $5 billion enterprise value. 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. All rights reserved. Ultimately, we and the Board necessarily must share the same objective: maximizing long-term value creation for United's stockholders, customers, and employees. We do not take job reductions lightly. 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. We know Meta has more reach, more relevance, and more incredible opportunities for growth than almost any platform on the planet. At $20-$25B of annual capex, Meta will still be investing market leading amounts to help invent the future of AI. That's what makes markets. Dear Chairman Meyer and Board Members: 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. He also asked Zuckerberg to cut down on capex and employee expenses. At the same time that Meta ramped up spend, you lost the confidence of investors. We don't think we're going to have 10 rate hikes and we do think there'll be an off ramp to the situation in Ukraine. But the fact of the matter is the entire market has evaporated around these types of stocks. I have deep respect and admiration for founders that continue to grind, inspire, and invent long after the financial motivation is gone. If the company were investing $12B per year into this project, then that confusion might not even be a problem. Brad, thank you. Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more! Congrats on the new show. Remember last year they gave a guide at the beginning of the year they're going to grow at 80%. 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. The vast majority of the capex has been an essential and high-returning investment in data centers, Nvidia GPUs and other AI resources to solidify the companys position as one of worlds leaders in AI. The Singaporean rideshare giant Grab is set to merge with the SPAC Altimeter Growth 1, according to a report from The Financial Times. Altimeter.com is Altimeter's only website. Altimeter Capital Management is an investment firm with offices in Menlo Park, CA, and Boston, MA. Sign up for free newsletters and get more CNBC delivered to your inbox. But what is the right amount? 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. Right. Experience Your Economic Times Newspaper, The Digital Way! We believe in this team. Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. Neither Altimeter, nor any of its affiliates or personnel, offers investment advisory services via the internet. 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. We believe the future lies in AI. 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? Data is a real-time snapshot *Data is delayed at least 15 minutes. It has 24 billion in free cash they're going to generate this year. 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. Chief Executive Officer Ro $500.0M. Revenue. Our contact information, solely for purposes of this Adherence Letter (and unrelated to the Questionnaire delivery options in the subsequent section) is: We consent to the publication of a conformed copy of this letter by ISDA and to the disclosure by ISDA of the contents of this letter. We worked hard on the deal and the timing was horrific. Get this delivered to your inbox, and more info about our products and services. The technology-focused hedge fund with a 0.1% ownership claimed that the company had lost investor confidence as it increased . Altimeter Capital Management LP. Industry Trends on 4000+ Stocks, Pro Investing by Aditya Birla Sun Life Mutual Fund, Canara Robeco Equity Hybrid Fund Direct-Growth, Cut workforce, spending on metaverse, key investor tells Mark Zuckerberg. Meta shares moved 6% higher following the announcement. You would simply do R&D quietly and investors would focus on the core business and the breakthroughs in AI. And we are confident that your long-term investments in AI and the next generation of communications will continue to drive us all forward. I said IDFA which is the Apple changes right? Today, the cost of capital has radically changed, and so has Metas growth rate. Why 20%? Sincerely, According to Hedge Follow, it was authored by Brad Gerstner, CEO and founder of technology investment firm Altimeter Capital. I think you're gonna see monetization gains against IDFA and either way we lap that issue in Q3 and Q4. Over the last three years, Meta has also dramatically increased its capital expenses. 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? GERSTNER: Well, the first thing I would say is this, set aside SPAC. Steven Cohen's: Point72 Asset Management. 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. BRAD GERSTNER: Hey, Scott, thanks for having me. 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%. August 2012 Protocol ALID: 66703 2023 International Swaps and Derivatives Association, Inc. As a result, the team hastily pivoted the company toward the metaverse including a surprise re-naming of the company to Meta. 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. We've never seen on the order of magnitude of the Marshall Plan at the beginning of COVID. He defied expectations and made profits on Priceline, Expedia, Uber, Twilio, and Hubspot. 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. But as you know, in the first three months of this year, all the high-quality stocks are being destroyed as well. Usually you don't capitalize after a colon, but there are exceptions. As a result, the team hastily pivoted the company toward the metaverse including a surprise re-naming of the company to Meta. 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. I've got some people including a guy coming up in a little while Mike Wilson who suggested at this point bonds may be a better deal than stocks. Right. The letter is the latest sign that Meta investors are starting to express reservations about the company's recent performance. I think that this is a business that is investing in the right things. click here! 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. This is a leading internet company in Southeast Asia. On Oct. 11, Meta announced a new high-end VR headset, the Quest Pro. 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. Meta can get its mojo back, says Brad Gerstner, but it will have to take some hard decisions first. 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. WAPNER: I hear you. 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. Altimeter said annual free cash flow can be doubled to $40 billion (roughly Rs. effective risk management for all users of derivative products. Privacy Policy, ISDA uses cookies to enhance your experience on our website. 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. Altimeter's nominees are: Chase Coleman's: Tiger Global Management. You know, I said on Twitter a few weeks ago, I don't think the Fed's behind the curve on rates. 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. We also believe Metas investment in AI will lead to exciting and important new products that can be cross-sold to billions of customers. Benchmark Reform and Transition from LIBOR InfoHub, Use of Chinese Government Bonds as Margin, Updated OTC Derivatives Compliance Calendar, ISDA-Clarus RFR Adoption Indicator: January 2023. Altimeter Capital Management partner Chris Conforti plans to leave the investment firm, according to people with knowledge of the matter. JavaScript in your web browser. By Altimeter Capital $750M Venture Capital in Feb, 2021 VROOM E-Commerce +2 Total funding $1.2B in 10 rounds from 15 investors By Altimeter Capital $50M Series E in Sep, 2016 Wingz Networking +3 Total funding $13.7M in 4 rounds from 36 investors By Altimeter Capital $11M Series B in Jan, 2016 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. The bottom line is where I wanted to start this whole interview with is you called it.