"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 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). That stuff was being advertised on Instagram. 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. 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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. Ranked #76 out of 483 Hedge Fund Managers. We want to hear from you. About Kevin Wang. 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. 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 Management, LP Days Trial Ray Dalio's: Bridgewater Associates. It was being purchased on the Shopify platform and people were using PayPal to check out. As always, we welcome the opportunity to engage in further discussions focused on this shared objective. Trading Book: Climate Risk Scenario Analysis Close Cart 0; Reveal page search bar; ISDA fosters safe and efficient derivatives markets to facilitate effective risk management for all users of derivative products. We simply wanted to further engage and continue sharing our thoughts as an interested shareholder. The Digital Markets Act (DMA) is a groundbreaking European law designed to rein in the power of the gatekeepers of the digital economy. 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. Metas core business is one of the largest and most profitable in the world with over $45 B in operating profits last year alone. ", Twitter. Meta Platforms, which is set to report third-quarter results on Wednesday after markets close, declined to comment. At the same time that Meta ramped up spend, you lost the confidence of investors. FREE Breaking News Alerts from StreetInsider.com! Social networking is the use of internet-based social media platforms to make connections and share various media with friends, family, colleagues, or customers. Meta. 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). We've never seen on the order of magnitude of the Marshall Plan at the beginning of COVID. Get this delivered to your inbox, and more info about our products and services. Altimeter Capital is an American investment firm based in Boston, Massachusetts and Menlo Park, California. Ultimately, Gerstner said, Meta has too many people and is spending too much on capital expenditures. Chicago, IL 60606 Drew Angerer | Getty Images News | Getty Images, Meta needs to focus on its core business, not the Metaverse, says Sand Hill's Brenda Vingiello. 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. Brad Gerstner's Phone Number and Email Last Update. There are a lot of companies with speculative business models, right, that are should have never been valued where they were valued and if you don't have absolute conviction, right, they can grow their product, grow their top line and grow their earnings to match where those earlier prices were, then you need to rotate those dollars out of those companies and into companies where you have that level of conviction. 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. Altimeter Growth Corp. 2 raised $400 million in a January IPO. 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? We have $130 oil and $6 gas at the pump. CAPEX Investing Aggressively and Responsibly in the Future of AI. Congrats on the new show. Read More . 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%. It just launched in 150 countries, has over a billion views. 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. Altimeter Capital. Meta stock is down over 61% in 2022. To experience the full functionality of the ISDA website, it is necessary to enable Javascript in your This is a company that only did 1.2 billion in revenue last year. 2550 Sand Hill Road, Suite 150. 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. Investopedia requires writers to use primary sources to support their work. Hedge Fund Manager. What is the Fed going to do? 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. 2023 CNBC LLC. Sign up for free newsletters and get more CNBC delivered to your inbox. I think they have to take a look at their capital allocation plan. 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. My bet is we're gonna have less this year. Why 20%? b***@altimeter.com. 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. We'll see you soon. [2] The firm focuses on technology investments in both public and private markets globally. 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. Brad Gerstner, Founder and CEO of Altimeter Capital; former board member of Orbitz Worldwide; All Rights Reserved. Usually you don't capitalize after a colon, but there are exceptions. Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts. In fact, we believe that augmented and artificial intelligence has the potential to drive more economic productivity than the internet itself. GERSTNER: Scott, I love that you asked the question. 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. Focusing the Metaverse: the Next Generation of Communication and Collaboration. 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. At the end of the second quarter this year, Altimeter Capital held more than 2 million shares of Meta. And Meta certainly has abundant financial resources to invest and / or return to shareholders. 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. 233 South Wacker Drive Updated on September 30, 2022. At the end of the second. 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. It can do great this, the business can be incredible. As you know, we have attempted to work collaboratively with the current Board to meaningfully improve governance, Board composition, and oversight. 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. effective risk management for all users of derivative products. 15 Brenda Yester Baty, Head of Strategic Initiatives at Lennar Corp.; former SVP Revenue Management at Carnival Cruise Lines. Altimeter. So I am very unhappy because I've lost money on the deal. These are not numbers on a spreadsheet. ", Medium.com. I mean, we're talking about billions of dollars in revenue but you left that out. After the pandemic, hospitals are now on a strong footing. 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. Think about this, Scott. So listen, I'm not happy about it. "In short, Meta needs to get fit and focused.". It's our largest position in the book. And then take that part of the world. But what is the right amount? 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. An estimated $100B+ investment in an unknown future is super-sized and terrifying, even by Silicon Valley standards. At $20-$25B of annual capex, Meta will still be investing market leading amounts to help invent the future of AI. The deal values the combined company at $35 billion and will. We were wrong. As I look at it, the market is now pricing in at least seven rate hikes. 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. It's a better version of Zoom. This is a leading internet company in Southeast Asia. click here! 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. 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. Focusing the Metaverse: the Next Generation of Communication and Collaboration. Meta Platforms CEO Mark Zuckerberg speaks about the Facebook News feature at the Paley Center For Media in New York on Oct. 25, 2019. I think that this is a business that is investing in the right things. At $20-$25B of annual capex, Meta will still be investing market leading amounts to help invent the future of AI. They are people with families and kids to support. Brad Gerstner's Altimeter Capital Management has between $300 million and $400 million in assets under management, and invests almost exclusively in the services sector. WAPNER: I hear you. You do, you do great work, excited for the new show and let's stay after it. We also believe Metas investment in AI will lead to exciting and important new products that can be cross-sold to billions of customers. At the same time that Meta ramped up spend, you lost the confidence of investors. 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. Ram Parameswaran is the founder of Octahedron Capital, a global, growth-oriented investment firm that seeks to make concentrated investments in leading public and private companies that drive the world's internet economy. I can't tell you what's going to happen the next three days or the next three weeks or even three months. After all, why not hire more people and invest in more things when the cost of capital was near zero and growth seemed unlimited? 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 . You can learn more about the standards we follow in producing accurate, unbiased content in our. March 8, 2016 As such, we would encourage the company to move aggressively and cut at least 20% of employee-related expenses by January 1, 2023. We did not see this talk of 10 rate hikes and we certainly didn't see a war developing in Europe. 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. 2,06,700 crore) a year and capped annual investment in the metaverse to $5 billion (roughly Rs . 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. Background [ edit] In 2008, Brad Gerstner founded Altimeter Capital in Boston, Massachusetts. At the start of COVID on March 26th when I felt about like I do today, growth stocks were under assault. Nov. 16, 2021 at 2:38 p.m. HONG KONG (AP) 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 . And what is going to be the resolution to the situation in the Ukraine? Includes DocuBay and TimesPrime Membership. c/o Chairman Henry L. Meyer III "An estimated $100B+ investment in an unknown future is super-sized and terrifying, even by Silicon Valley standards," Gerstner wrote. It can do that by making. 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. So we're in the neighborhood of a tradable bottom. Chief Executive Officer With all of this said, we truly believe that the company should be making some of these important investments. . Finally, Prudential PLC lifted its . These are not numbers on a spreadsheet. Will His AI Plans Be Any Different? 2023 CNBC LLC. 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. WAPNER: Okay, that's a that's a big a bold call. Paul A. Reeder 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. We're down on the year. Panel led by former SC judge to include NaBFID chair KV Kamath and Infys Nandan Nilekani.