Focusing the Metaverse: the Next Generation of Communication and Collaboration. They were cratering ironically, now we're normalizing and growth stocks are down even more than they were at the start of COVID. WAPNER: So let me talk about your overall exposure if I if I could because by last December, you had said you had taken most of your your shorts off and your long exposure was back up to 70%. Limit investment in metaverse / Reality Labs to no more than $5B per year. Altimeter Capital Management LP. It's my job to ask you about it knowing you're not happy about it and you answered the question. PAR Capital Management, Inc. Do Not Sell My Personal Data/Privacy Policy. 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. We want to hear from you. 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. We know Meta has more reach, more relevance, and more incredible opportunities for growth than almost any platform on the planet. Revenue. Those decisions include slashing expenditure and reducing headcount, the CEO of Altimeter Capital told Meta founder Mark Zuckerberg in an open letter. This lack of focus and fitness is obscured when growth is easy but deadly when growth slows and technology changes. They are people with families and kids to support. FTX, once the third-largest centralized cryptocurrency exchange, is now in U.S. bankruptcy. We didn't think that was durable. 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. 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). With that said, we have a shortage of talent in Silicon Valley. 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. effective risk management for all users of derivative products. It makes no sense to me, but that is the risk that you run. They're fearful about what's going to happen with rates. It takes effect in 2023. These are not numbers on a spreadsheet. +Includes DocuBay and TimesPrime Membership. This is a company that only did 1.2 billion in revenue last year. Protocol: That was our baseline that we were going to have a relatively soft landing, three to four rate hikes. 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. 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. So I think they got to match the investment to the revenue growth of the business. Some companies require tremendous capex investment to maintain their existing business. Altimeter is focused on technology investment, and has found multi-billion-dollar success. 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." AGCUU went public at $10 on Oct. 1, and closed Tuesday at $11.80. Ray Dalio's: Bridgewater Associates. An estimated $100B+ investment in an unknown future is super-sized and terrifying, even by Silicon Valley standards. Bill Ackman's: Pershing Square Capital Management. Altimeter Capital Management LP Info Size ($ 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. We further understand that ISDA assigned a unique identification code or ALID to each adherence letter that was accepted for the August 2012 Protocol or the March 2013 Protocol and that, in order to amend a Protocol Covered Agreement pursuant to: (i) Appendix 1 to this Protocol (which is intended to top up agreements made pursuant to the August 2012 Protocol), we must provide our August 2012 Protocol ALID below; or (ii) Appendix 2 to the Protocol (which is intended to top up agreements made pursuant to the March 2013 Protocol), we must provide our March 2013 Protocol ALID below: The stock today hit a new low under $3. And notably, this decline in share price mirrors the lost confidence in the company, not just the bad mood of the market. March 2013 Protocol ALID: 66704. 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. 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. 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. After all, why not hire more people and invest in more things when the cost of capital was near zero and growth seemed unlimited? 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 between each other Adhering Party and us, the amendments in the Appendices to the Protocol shall apply to each Protocol Covered Agreement to which we are a party in accordance with the terms of the Protocol and this Adherence Letter. 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. ET on GuruFocus.com Builders Union LLP Buys AppLovin Corp, Match. Facebook's revenues in Q1 were lower than people expected. Steven Cohen's: Point72 Asset Management. 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. With the gains posted on March 3, Meta Platforms shares are up 54% this year. Altimeter Capital is an American investment firm based in Boston, Massachusetts and Menlo Park, California. We certainly are neither short-term traders nor activists. He defied expectations and made profits on Priceline, Expedia, Uber, Twilio, and Hubspot. Ro $500.0M. Altimeter is based in California and has about $16 billion in . Got a confidential news tip? He said the money the company is currently spending to develop VR could add up for a decade before it comes to fruition. 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. Capitalizing on the fund's VC success, Gerstner raised $450M for Altimeter Growth Corp (AGCUU), a blank check company IPO targeting the tech sector. Regrettably, our efforts have led to our complete loss of confidence in the current Board, and to our firm determination that meaningful, stockholder-directed Board change is urgently required to serve the long-term best interests of United's stockholders, customers, and employees. 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 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. In addition, people are confused by what the metaverse even means. Dont miss out on ET Prime stories! 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. Based on yesterday's announcement, it seems the Board now agrees that for many years it operated with a suboptimal composition. Rodney O'Neal, former CEO of Delphi Automotive; former board member of Delphi Automotive, Sprint, and Goodyear; 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. Altimeter manages a long / short public equity fund and private growth equity funds. Altimeter Capital Management partner Chris Conforti plans to leave the investment firm, according to people with knowledge of the matter. But Meta needs to get its mojo back. 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. This will alert our moderators to take action. In the letter, Gerstner said Altimeter Capital doesn't have demands and simply wants to engage with Meta management. Right. Brad Gerstner's Phone Number and Email Last Update. 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. CAPEX Investing Aggressively and Responsibly in the Future of AI. We were about 30% to 40% depending upon which basket you looked at software internet above the five-year average. I mean you have defended it at every turn from the issues that the company has had you you defended Mark Zuckerberg, you've defended Sheryl Sandberg and you you did it quite loudly on this program. 2550 Sand Hill Road, Suite 150. will trigger a new window or tab to open. As a result, the team hastily pivoted the company toward the metaverse including a surprise re-naming of the company to Meta. Bruce Berkowitz's: Fairholme Capital Management. 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. The firm also considers investments in the consumer products and services, gaming, retail, and transportation sectors. Experience Your Economic Times Newspaper, The Digital Way! They just announced that they're going to be profit, full company profitable by 2023. He joins me live. But what is the right amount? And frankly, I was going to play some sound from you from our Delivering Alpha event last September where you called a lot of this but I don't even have to do that anymore because you just went through it. 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.. Everybody knows we've been in this company for a long time. Every company I talked to is tightening its belts. Meta reported in February that Reality Labs lost $13.72 billion in 2022. As always, happy to connect with you and your team. 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. Worse, this skepticism seemed to be affirmed with a nearly-immediate and sizable miss in financial results and continued under-performance throughout 2022. 16,839 Followers. In Q1 of 2021, everybody was sitting on their couch. Remember last year they gave a guide at the beginning of the year they're going to grow at 80%. 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. There is no doubt that doubling annual FCF will improve share price. That's what makes markets. Some companies require tremendous capex investment to maintain their existing business. Brad, thank you. A Division of NBCUniversal. Choose your reason below and click on the Report button. Brad Gerstner, Founder and CEO of Altimeter Capital; former board member of Orbitz Worldwide; Privacy Policy, ISDA uses cookies to enhance your experience on our website. And what is going to be the resolution to the situation in the Ukraine? They are people with families and kids to support. The metaverse is a shared virtual environment with aspects of online gaming, augmented reality, and more that people can access via the Internet. This is a region of 700 million plus people. Why 20%? As you know, we are long-term shareholders. At Meta, the number of employees is up over 3x from 25k to 85k employees in just the last four years! Altimeter Capital Management, LLC a Portfolio Activity as reported in the most recent 13F form published on Dec 31, 2022. We think this is a 3X in three years even if software multiples remain at these levels near the five-year average. $6.9 M. And we are confident that your long-term investments in AI and the next generation of communications will continue to drive us all forward. 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. At the end of the second. We think both of those are solvable. 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. Brenda Yester Baty, Head of Strategic Initiatives at Lennar Corp.; former SVP Revenue Management at Carnival Cruise Lines. 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%. Metas core business is one of the largest and most profitable in the world with over $45 B in operating profits last year alone. I mean, two years ago we were we were having this conversation. After the pandemic, hospitals are now on a strong footing. The conventional wisdom press and investor is that the core business hit a wall last fall. But you also (sometimes) capitalize the first word of a quote. We agree to pay a one-time fee of $500 to ISDA at or before the submission of this Adherence Letter. I have been told that Amazon spent far less in total to build AWS. No matter how a company came public in 2021, let alone December of 2021, right, they've been obliterated. It's interesting that now today you say we're in the neighborhood of a tradable bottom. ", Medium.com. So, its with some hesitation, but significant conviction, I am sharing an open letter strongly encouraging Meta to streamline and focus its path forward. And so we add on a fair amount of exposures we entered this year. At $20-$25B of annual capex, Meta will still be investing market leading amounts to help invent the future of AI. Meta and other large companies have made it very difficult for start-ups to hire. 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 think, or inflation, I think they're behind the curve on recession. Right? I don't think stocks today reflect a great price discovery about where these stocks are going to be in six months, let alone two years, but I'm also eyes wide open to the fact that we could go lower before we go higher. Consumer confidence is plummeting. b***@altimeter.com. Consumer confidence is plummeting. The changes for the Quest 2 begin Sunday, March 5. Get your daily dose of business updates on WhatsApp. I don't think there's any chance that the Fed is going to raise rates 10 times this year. International Swaps and Derivatives Association. 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. 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. Nov. 16, 2021 at 2:38 p.m. Conclusion A Leaner, Faster, More Successful Meta. Sincerely, We are generally patient investors. The same is true for Microsoft, right? What is the metaverse and why are billions of dollars being spent on it? 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. What is the connection between those three companies. Read More . Ultimately, Gerstner said, Meta has too many people and is spending too much on capital expenditures. We did not see this talk of 10 rate hikes and we certainly didn't see a war developing in Europe. This is a business it's trading at 12 times free cash flow, X the meta investment and 18 times including. All of China internet down over 80%. 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. 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. And then take that part of the world. 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. 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. Altimeter Capital Management LP lifted its position in shares of SEA by 128.0% during the first quarter. The facts are startling. Benzinga does not provide investment advice. 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. Meta said the cost of the Quest 2 will drop $70 to $429.99, while the price of the higher-end Quest Pro will be slashed to $999.99 from $1,499.99. Reels, which is a massive product is going to increase its monetization between now and the end of the year. We're withdrawing trillions off the Fed's balance sheet. If multiples expand then you have even more upside. March 8, 2016 We simply wanted to further engage and continue sharing our thoughts as an interested shareholder. Right. Let me tell you the bear case on Facebook, okay, the bear case on Facebook and other ad models like Google is that we're running headlong into a massive recession.

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