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. Social networking is the use of internet-based social media platforms to make connections and share various media with friends, family, colleagues, or customers. ISDA fosters safe and efficient derivatives markets to facilitate In fact, we distributed over $6 billion worth of Snowflake to our venture investors last year. You know, I said on Twitter a few weeks ago, I don't think the Fed's behind the curve on rates. "Meta Reports Fourth Quarter and Full Year 2022 Results," Page 10. 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. ISDA fosters safe and efficient derivatives markets to facilitate effective risk management for all users of derivative products. In the last 18 months, Meta stock is down 55% (compared to an average of 19% for its big-tech peers). It's a better version of Zoom. They are people with families and kids to support. Of course, a company that connects nearly three billion users on phone and text must be investing in the next generation of communication. GERSTNER: No, I didn't leave it out. 15 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. 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. 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. 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. I remember people asking that question about Amazon. 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. Brad Gerstner, Altimeter's chair who encouraged aggressive investment in artificial intelligence, said the firm wanted to engage with Meta and did not have any demands. It's 3 trillion, right? 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. I expected that as the world of normalized post Omicron that we would get back to the five-year average multiple. Contact. 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. 3,30,700 crore) if it cut headcount by at least 20 percent, trimmed capital expenditure by at least $5 billion (roughly Rs. FTX founder Sam Bankman-Fried was not only a tireless fundraiser from venture capital firms including Paradigm and Sequoia Capital, but also quietly made investments in those same funds, according to two people familiar with the matter. In fact, we believe that augmented and artificial intelligence has the potential to drive more economic productivity than the internet itself. This is a company that only did 1.2 billion in revenue last year. Can they maintain their growth momentum? Nobody debates whether or not this company is going to be more valuable in the future. The company explained that its goal has always been to "create hardware that's affordable for as many people as possible to take advantage of all that VR has to offer." Before we we move, what do I do with Facebook? I don't think Mark did a particularly good job of explaining the meta investments. They're building their own ad platform, right, that can deal with this. 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. Data is a real-time snapshot *Data is delayed at least 15 minutes. The stock today hit a new low under $3. In the last 18 months, Meta stock is down 55% (compared to an average of 19% for its big-tech peers). Dave Baszucki of Roblox describes the metaverse as the natural evolution of communication a multi-device world, including the phone, that is best thought of as a better version of text, video, and voice that will make us feel more connected. There is no doubt that doubling annual FCF will improve share price. 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. Barney Harford, former CEO of Orbitz Worldwide; former board member of Orbitz Worldwide and eLong; At first glance, the rules of English capitalization seem simple. Remember last year they gave a guide at the beginning of the year they're going to grow at 80%. ISDA 2021 SBS Top-Up Protocol, Adhering Organization: We also believe Metas investment in AI will lead to exciting and important new products that can be cross-sold to billions of customers. Days Trial We want to hear from you. Menlo Park, CA 94025 (650) 549-9145 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies: . Of course, a company that connects nearly three billion users on phone and text must be investing in the next generation of communication. So, its with some hesitation, but significant conviction, I am sharing an open letter strongly encouraging Meta to streamline and focus its path forward. They just announced that they're going to be profit, full company profitable by 2023. 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? Read More . Market Research. Consumer confidence is plummeting. 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. Will His AI Plans Be Any Different? "Jitesh Ubrani: Tweet From March 3, 2023. We know Meta has more reach, more relevance, and more incredible opportunities for growth than almost any platform on the planet. I think we spent about an hour together. At the end of the second quarter this year, Altimeter Capital held more than 2 million shares of Meta. The Digital Markets Act (DMA) is a groundbreaking European law designed to rein in the power of the gatekeepers of the digital economy. A Division of NBCUniversal. This is a region of 700 million plus people. 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. 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. The changes for the Quest 2 begin Sunday, March 5. Altimeter Capital Management, LP ("Altimeter") is an SEC-registered investment adviser. Altimeter Capital launched its two SPACs in October and January, raising a combined $850 million between the two blank-check vehicles. According to Hedge Follow, it was authored by Brad Gerstner, CEO and founder of technology investment firm Altimeter Capital. He argued that this was "one of the big reasons behind these price cuts.". 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. We're not in the business of being long or short bonds generally I'd put them on as a hedge against our growth exposure. Right? Can you tell me where that stands now and how you view stocks like that that have gotten absolutely obliterated? 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. Think about this, Scott. At $20-$25B of annual capex, Meta will still be investing market leading amounts to help invent the future of AI. We believe that our conclusion is shared by many of United's long-suffering stockholders, customers, and 80,000+ dedicated employees. 2,06,700 crore) a year and capped annual investment in the metaverse to $5 billion (roughly Rs . The definitions and provisions contained in the Protocol Agreement are incorporated into this Adherence Letter, which will supplement and form part of each Protocol Covered Agreement between us and each other Adhering Party. Hedge Fund Manager. Altimeter. He also asked Zuckerberg to cut down on capex and employee expenses. This would double annual FCF and put FCF as a percentage of revenue more in line with Google, Microsoft, and Apple. And we've had government intervention of the magnitude. See here for a complete list of exchanges and delays. Updated on September 30, 2022. 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. Worse, this skepticism seemed to be affirmed with a nearly-immediate and sizable miss in financial results and continued under-performance throughout 2022. 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. On top of that we had supply chain challenges. "If the company were investing $1-2B per year into this project, then that confusion might not even be a problem.". So were Shopify's and so were PayPal. GERSTNER: Well, first let's talk about what took Facebook down, right? ISDA fosters safe and efficient derivatives markets to facilitate But the fact of the matter is the entire market has evaporated around these types of stocks. The Singaporean rideshare giant Grab is set to merge with the SPAC Altimeter Growth 1, according to a report from The Financial Times. Chief Executive Officer This company is perfectly positioned to capitalize on that they have the, the ad network to monetize it. And Meta certainly has abundant financial resources to invest and / or return to shareholders. Portfolio Gain +273.45%. Headquarters Location One International Place Suite 2400 Boston, Massachusetts, 02110, United States 617-310-6180 Suggest an edit Altimeter Capital Management LP Info Size ($ in 1000's) At 12/31/2022: $3,652,571 At 09/30/2022: $4,676,285 Altimeter Capital Management LP holdings changes, total fund size, and other information presented on HoldingsChannel.com was derived from Altimeter Capital Management LP 13F filings. Altimeter Capital is an American investment firm based in Boston, Massachusetts and Menlo Park, California. It takes effect in 2023. We worked hard on the deal and the timing was horrific. But the company's dreams have fallen short as the Reality Labs unit, which works on augmented and virtual reality, has continuously reported staggering losses. PLAN, Yearly A Division of NBCUniversal. 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. What is the connection between those three companies. Board of Directors c/o Chairman Henry L. Meyer III United Continental Holdings, Inc. . How many dogs want to eat the dog food? Experience Your Economic Times Newspaper, The Digital Way! We do not take job reductions lightly. 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. 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. 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.. The cumulative benefit of the recommended adjustments outlined above would increase FCF by at least $20B in 2023 ($10B from people-related expense reduction, $5B from capex reduction, and $5B from reduced metaverse spend). Sincerely, Credit Derivatives Determinations Committees, how to enable International Swaps and Derivatives Association. . We'll see you soon. 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. As always, we welcome the opportunity to engage in further discussions focused on this shared objective. Form of Letter Agreement between the Registrant, the Sponsor and each director and executive officer of the Registrant. In addition, people are confused by what the metaverse even means. And now we've shot right through the five-year average. 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. CNBC Exclusive: CNBC Transcript: Altimeter Capital Founder & CEO Brad Gerstner Speaks with CNBC's Scott Wapner on "Closing Bell: Overtime" Today Published Mon, Mar 14 20225:56 PM EDT Share. The facts are startling. Some companies require tremendous capex investment to maintain their existing business. We are confident that these employees will find replacement jobs and quickly be back to work on important inventions that will move us all forward. We were about 30% to 40% depending upon which basket you looked at software internet above the five-year average. Meta changed its company name from Facebook. 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 Brenda Yester Baty, Head of Strategic Initiatives at Lennar Corp.; former SVP Revenue Management at Carnival Cruise Lines. FTX, once the third-largest centralized cryptocurrency exchange, is now in U.S. bankruptcy. Search ISDA ISDA fosters safe and efficient derivatives markets to facilitate effective risk . It's interesting that now today you say we're in the neighborhood of a tradable bottom. Meta stock is down over 61% in 2022. Recently Active; Top Discussions; Best Content; WSO Media; BY INDUSTRY; Investment Banking Altimeter Capital Management partner Chris Conforti plans to leave the investment firm, according to people with knowledge of the matter. 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%. 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. An estimated $100B+ investment in an unknown future is super-sized and terrifying, even by Silicon Valley standards. 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. 2023 CNBC LLC. 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. We simply wanted to further engage and continue sharing our thoughts as an interested shareholder. 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. Amazon Is Closing Its Cashierless Stores in NYC, San Francisco and Seattle, Amazon Pauses Construction on Second Headquarters in Virginia as It Cuts Jobs, Stock Traders Are Ignoring Blaring Bond Alarms, iPhone Maker Plans $700 Million India Plant in Shift From China, Russia Is Getting Around Sanctions to Secure Supply of Key Chips for War. In the letter, Gerstner said Altimeter Capital doesn't have demands and simply wants to engage with Meta management. 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. It's been a big drawdown 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. It lost $5.8 billion in the first six months of the year. The stock is 51% off of its high. 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 . 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. CAPEX Investing Aggressively and Responsibly in the Future of AI. Some companies require tremendous capex investment to maintain their existing business. Today, the cost of capital has radically changed, and so has Metas growth rate. We can just go through the list, Uber, Facebook, Roblox. That's because enterprises love their product. 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. At the same time that Meta ramped up spend, you lost the confidence of investors. 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. Ro $500.0M. So I am very unhappy because I've lost money on the deal. "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," Gerstner wrote in the letter. We're down on the year. Copyright 2023 Bennett, Coleman & Co. Ltd. All rights reserved. The Wall Street Journal reported on Thursday that Grab was in talks with Altimeter. Moreover, I am a strong supporter of founder-led companies especially when they have your successful track record of seeing the future. Ray Dalio's: Bridgewater Associates.