We know they have high EBITDA margins on the rideshare business which is dominant across the region. It's 3 trillion, right? And I've let the company know that, right? . 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. In his open letter, Gerstner asked Meta to cap its expenditure on the metaverse to $5 billion a year from the current announced investment of $10-15 billion. GERSTNER: Scott, thanks for having me. That's the asymmetry. We worked hard on the deal and the timing was horrific. 3. This lack of focus and fitness is obscured when growth is easy but deadly when growth slows and technology changes. If multiples expand then you have even more upside. Updated on September 30, 2022. Southeast Asia's Grab in talks for U.S. listing via $40 billion SPAC Over time, we intend to share with United's stockholders our detailed analysis, which has led us to conclude, among other things, that: This is a leading internet company in Southeast Asia. 2023 Benzinga.com. 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. "In short, Meta needs to get fit and focused.". I expected that as the world of normalized post Omicron that we would get back to the five-year average multiple. SPACs notched more than $70 billion so far in 2021, a new record. c/o Chairman Henry L. Meyer III FalconX Raises $210M Following 30x YoY Revenue Growth; Now Valued at $3 The facts are startling. We believe that our conclusion is shared by many of United's long-suffering stockholders, customers, and 80,000+ dedicated employees. It will get there three years from now because it's free cash flow margin will continue to expand and if you just get it, give it the multiples that are currently in the market, right, that have already drawn down on free cash flow, you get to that 3X that I quoted. "Bloomberg Opinion" columnists offer their opinions on issues in the news. GERSTNER: Well, first let's talk about what took Facebook down, right? Q1 2021: 13 Largest Global Startup Funding Rounds - AlleyWatch Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. 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. 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. 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. Altimeter Capital owns about 2.46 million Meta shares. This would double annual FCF and put FCF as a percentage of revenue more in line with Google, Microsoft, and Apple. 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. Is it close to being done? 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. They are people with families and kids to support. 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. On Oct. 11, Meta announced a new high-end VR headset, the Quest Pro. Altimeter.com is Altimeter's only website. Those decisions include slashing expenditure and reducing headcount, the CEO of Altimeter Capital told Meta founder Mark Zuckerberg in an open letter. 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. When you look at these questions, it comes down to this. Grab to list in US via $40 bln merger with Altimeter Growth 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. 'Super-Sized and Terrifying': Zuckerberg's $100B Metaverse Gamble Days Trial This is expected to facilitate trade as the West ratchets up sanctions on Russia. Moreover, Meta has industry leading capabilities in key future technologies like artificial intelligence and immersive 3d that will help drive new products and future growth. Remember last year they gave a guide at the beginning of the year they're going to grow at 80%. Whatever the reason, that is certainly the perception. 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? On top of that we had supply chain challenges. Time to Get Fit an Open Letter from Altimeter to Mark Zuckerberg (and the Meta Board of Directors) | by Brad Gerstner @altcap | Medium 500 Apologies, but something went wrong on our end.. Unlock your 30 days free access to ETPrime now. Conforti plans to join a new firm as a co-founder with former Whale Rock Capital Management partner Kristov Paulus, said one of the people, who asked not to be identified because the information is private. It's interesting that now today you say we're in the neighborhood of a tradable bottom. 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. It did not specify which of Alitmeter's SPACs Grab was in talks with. In addition, people are confused by what the metaverse even means. As you know, we are long-term shareholders. 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. 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. When you were with me in December, you said that you had picked some more of that up along with Snowflake. Crowdfunding is the use of small amounts of capital from a large number of people to raise money or fund a business. See here for a complete list of exchanges and delays. Altimeter Partner Chris Conforti to Leave the Investment Firm Focusing the Metaverse: the Next Generation of Communication and Collaboration. Brenda Yester Baty, Head of Strategic Initiatives at Lennar Corp.; former SVP Revenue Management at Carnival Cruise Lines. 3,30,700 crore) if it cut headcount by at least 20 percent, trimmed capital expenditure by at least $5 billion (roughly Rs. At Meta, the number of employees is up over 3x from 25k to 85k employees in just the last four years! 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. All quotes delayed a minimum of 15 minutes. Nov. 16, 2021 at 2:38 p.m. So take Snowflake as an example. The Singaporean rideshare giant Grab is set to merge with the SPAC Altimeter Growth 1, according to a report from The Financial Times. Data is a real-time snapshot *Data is delayed at least 15 minutes. Instead, they grew at 106%. Ranked #76 out of 483 Hedge Fund Managers. Altimeter Capital Management partner Chris Conforti plans to leave the investment firm, according to people with knowledge of the matter. International Swaps and Derivatives Association. All rights reserved. The Meta investor recommends a plan to get the company's "mojo back.". 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. committed hundreds of millions of dollars to Sequoia Capital, Altimeter Capital Management and Multicoin . And we've had government intervention of the magnitude. Meta stock is down over 61% in 2022. Form of Letter Agreement between the Registrant, the Sponsor and each director and executive officer of the Registrant. Can it possibly be worth 200 billion? 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Altimeter Growth Corp. raised $450 million in an October 2020 IPO. It includes reducing headcount expenses by 20% and limiting the company's pricey investments in "metaverse" technology to no more than $5 billion per year. Your Reason has been Reported to the admin. PLAN, Yearly About Kevin Wang. Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. So I think they got to match the investment to the revenue growth of the business. We simply wanted to further engage and continue sharing our thoughts as an interested shareholder. 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. A Division of NBCUniversal. Altimeter SPAC Taking Grab Public | PYMNTS.com To put it in perspective, Roblox was a couple percent position for us, right, and Snowflake was a 30% position for us. Now that's what's going on in the business so all those people writing rest in peace epitaphs for Facebook are going to have to deal with that acceleration. Global Business and Financial News, Stock Quotes, and Market Data and Analysis. WAPNER: Okay, that's a that's a big a bold call. Market Research. 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. We didn't think that was durable. To read full story, subscribe to ET Prime, Billed annually at 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. Portfolio Gain +273.45%. We are generally patient investors. 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 move comes amid a decline in Meta's VR shipments and pressure from activist shareholders to improve the financial picture of its metaverse division. Altimeter Capital Management, LP - International Swaps and Derivatives 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. A securities lawyer, Brad Gerstner graduated from HBS in 2000 and joined General Catalyst. AGCUU went public at $10 on Oct. 1, and closed Tuesday at $11.80. Meta needs to regain the confidence of investors, the public and employees, Altimeter Capital Management CEO Brad Gerstner said Monday in an open letterto Zuckerberg. Altimeter SPACs surge on reported $40 billion deal for Singapore ride The facts are startling. And as a result, you know, last year we held up better than most because we own high-quality stocks, and we were short lower quality stocks. 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've never seen on the order of magnitude of the Marshall Plan at the beginning of COVID. 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. That's what makes markets. Days Trial. CAPEX Investing Aggressively and Responsibly in the Future of AI. effective risk management for all users of derivative products. Welcome to "Overtime.". 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. 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. 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. It's a better version of Zoom. And we are confident that your long-term investments in AI and the next generation of communications will continue to drive us all forward. 2023 CNBC LLC. It said Grab is expected to raise between. 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. At least one big investor is calling for Mark Zuckerberg to throw in He joins me live. We believe in this team. 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. Global Business and Financial News, Stock Quotes, and Market Data and Analysis. 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. Meta CTO Andrew Bosworth writes Facebook of old had focus in blog post WAPNER: I hear you. 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. They're building their own ad platform, right, that can deal with this. 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. Where's your exposure today? Altimeter Capital Management, LP ("Altimeter") is an SEC-registered investment adviser. Nobody debates whether or not this company is going to be more valuable in the future. GERSTNER: Right Scott so that you know I started off by saying you know we've been beaten up this year like everybody else because I was covering shorts as we approach the five-year average. ", Medium.com. 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 . Meta changed its company name from Facebook. [3] 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. 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. Altimeter Capital Management LLC. Worse, this skepticism seemed to be affirmed with a nearly-immediate and sizable miss in financial results and continued under-performance throughout 2022. Altimeter SPAC Has Reported $40 Billion Deal for Ride-Hail Company Grab 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. The conventional wisdom press and investor is that the core business hit a wall last fall. 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. And Meta certainly has abundant financial resources to invest and / or return to shareholders. Metas core business is one of the largest and most profitable in the world with over $45 B in operating profits last year alone. articles a month for anyone to read, even non-subscribers! Meta and other large companies have made it very difficult for start-ups to hire. Altimeter's second tech SPAC Altimeter Growth Corp. 2 files - Nasdaq The Digital Markets Act (DMA) is a groundbreaking European law designed to rein in the power of the gatekeepers of the digital economy. Meta Platforms, which is set to report third-quarter results on Wednesday after markets close, declined to comment. effective risk management for all users of derivative products. 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. 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. "An estimated $100B+ investment in an unknown future is super-sized and terrifying, even by Silicon Valley standards," Gerstner wrote. 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. I don't think Mark did a particularly good job of explaining the meta investments. The conventional wisdom press and investor is that the core business hit a wall last fall. The full text of the stockholder letter to the United Board follows: March 8, 2016. Brad Gerstner - Founder & Chief Ex.. - Altimeter Capital - ZoomInfo Moreover, Meta has industry leading capabilities in key future technologies like artificial intelligence and immersive 3d that will help drive new products and future growth. This is a business it's grown, it's trading at 28 times free cash flow with 20% growth, that will continue to compound. Credit Derivatives Determinations Committees, how to enable 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. 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. Brad, thank you. March 8, 2016 With that said, we have a shortage of talent in Silicon Valley. "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. 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). The technology-focused hedge fund with a 0.1% ownership claimed that the company had lost investor confidence as it increased . 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. 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. I think the only debate is what is the multiple going to be in three months, in six months, in nine months. Altimeter said such huge investments "in an unknown future is super-sized and terrifying, even by Silicon Valley standards". 9/29/2022 1:05 AM. Facebook parent Meta Platforms (META) announced that it would reduce selling prices for its Quest virtual reality (VR) headsets. Frankly, if I was Sea Limited, if I was Uber, I might be looking at consolidating the business. This is a company that only did 1.2 billion in revenue last year. Panel led by former SC judge to include NaBFID chair KV Kamath and Infys Nandan Nilekani. Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. Menlo Park, CA 94025 (650) 549-9145 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies: . 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 so that will be rolled out in Q2 and Q3. Consumer confidence is plummeting. Airline Industry Veteran Gordon Bethune Leads Stockholder-Nominated Share Your Design Ideas, New JerseysMurphy Defends $10 Billion Rainy Day Fund as States Economy Slows, This Week in Crypto: Ukraine War, Marathon Digital, FTX. Chris Conforti - Partner - Altimeter | LinkedIn 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. Ram Parameswaran: The Investment Philosophy of an Internet Investor What Does Metaverse Mean and How Does This Virtual World Work? 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 simply wanted to further engage and continue sharing our thoughts as an interested shareholder. August 2012 Protocol ALID: 66703 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. 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. 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 . PAR Capital Management, Inc. Do Not Sell My Personal Data/Privacy Policy. We want to hear from you. Today, the cost of capital has radically changed, and so has Metas growth rate. 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. And so we're getting hurt like everybody else. We have $130 oil and $6 gas at the pump. Meta and other large companies have made it very difficult for start-ups to hire. Techmeme: Open letter: Altimeter Capital founder and CEO Brad Gerstner It makes no sense to me, but that is the risk that you run. 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. 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. ISDA is a registered trademark of the International Swaps and Derivatives Association, Inc. 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. 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. A newly launched P2E adventure game, Chronos: Dawn of Tie, has introduced a series of brand-new PvP elimination tournaments.Last month, the whimsical battle game organized its beta stage featuring selected players. In addition, people are confused by what the metaverse even means. With all of this said, we truly believe that the company should be making some of these important investments. We want to hear from you. 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. Meta (Facebook) Begins Biggest Layoffs in Company's History, Meta (META) Connect Conference Key Takeaways, Meta (Facebook) Shares Slammed as Earnings, Spending Disappoint. We've destroyed over $15 trillion of stock market wealth. Benzinga does not provide investment advice. Before we we move, what do I do with Facebook? How big is that market? So I am very unhappy because I've lost money on the deal. 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. 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. 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.