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. I expected that as the world of normalized post Omicron that we would get back to the five-year average multiple. An estimated $100B+ investment in an unknown future is super-sized and terrifying, even by Silicon Valley standards. 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. See here for a complete list of exchanges and delays. This will alert our moderators to take action. They were cratering ironically, now we're normalizing and growth stocks are down even more than they were at the start of COVID. After the pandemic, hospitals are now on a strong footing. Those decisions include slashing expenditure and reducing headcount, the CEO of Altimeter Capital told Meta founder Mark Zuckerberg in an open letter. Capitalizing on the fund's VC success, Gerstner raised $450M for Altimeter Growth Corp (AGCUU), a blank check company IPO targeting the tech sector. 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. 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. Metas core business is one of the largest and most profitable in the world with over $45 B in operating profits last year alone. 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. Altimeter Capital Management is a technology focused investment firm based in Menlo Park, CA and Boston, MA. 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. 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. Comprender el funcionamiento social, poltico, econmico, cultural y natural de la sociedad a fin de reflexionar, hacer propuestas y asumir compromiso en torno a las polticas de desarrollo nacional, local y regional en el mbito del respeto de los derechos humanos, la integracin econmica y la convivencia social, bajo una concepcin de desarrollo humano sostenible. Altimeter Capital's Brad Gerstner Issues Open Letter to Meta (NASDAQ: META) and Mark Zuckerberg. 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. Altimeter.com is Altimeter's only website. Brad, thank you. Facebook parent Meta Platforms (META) announced that it would reduce selling prices for its Quest virtual reality (VR) headsets. "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. 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. We can just go through the list, Uber, Facebook, Roblox. 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). 10. Can it possibly be worth 200 billion? We'll see you soon. That stuff was being advertised on Instagram. 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. A letter addressed to Zuckerberg and the board of directors was published on Oct. 24. 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? 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. A Division of NBCUniversal. 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. He joins me live. Paul A. Reeder 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. As always, happy to connect with you and your team. 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. Drew Angerer | Getty Images News | Getty Images, Meta needs to focus on its core business, not the Metaverse, says Sand Hill's Brenda Vingiello. What is the rate of increase? It just launched in 150 countries, has over a billion views. WAPNER: Okay, that's a that's a big a bold call. And we've had government intervention of the magnitude. With the gains posted on March 3, Meta Platforms shares are up 54% this year. Menlo Park, CA 94025 (650) 549-9145 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies: . 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. Ray Dalio's: Bridgewater Associates. 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. 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. ISDA is a registered trademark of the International Swaps and Derivatives Association, Inc. 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 . The full text of the stockholder letter to the United Board follows: March 8, 2016. Brad Gerstner, the CEO of Altimeter Capital and a Meta investor, wrote in an open letter to the company in October that Meta needs to "get fit and focused," and he was critical of the hefty. It makes no sense to me, but that is the risk that you run. Warren Buffett's: Berkshire Hathaway. Nobody debates whether or not this company is going to be more valuable in the future. You probably know you should capitalize proper nouns and the first word of every sentence. 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%. 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. . Altimeter Capital Management, LP ("Altimeter") is an SEC-registered investment adviser. The conventional wisdom press and investor is that the core business hit a wall last fall. Stock Radar: 19% from Budget Day! Altimeter Capital owns about 2.46 million Meta shares. Despite public skepticism at times warranted we have been supporters 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. And notably, this decline in share price mirrors the lost confidence in the company, not just the bad mood of the market. 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. 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. On Oct. 11, Meta announced a new high-end VR headset, the Quest Pro. "Meta Reports Fourth Quarter and Full Year 2022 Results," Page 10. Meta Platforms (META) shares jumped 6% after the tech giantannouncedbig price cuts for its virtual reality (VR) headsets. 2023 Benzinga.com. They may never get back to the levels at which they traded before. I think that this is a business that is investing in the right things. 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. effective risk management for all users of derivative products. And frankly, I don't think we're gonna have hyperinflation in a world where demand is being destroyed at the rate it's currently being destroyed. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. It added that VR is "a powerful social platform and creative technology, and the more people with access to it, the better. But admittedly, you know, nights like tonight we'll we'll get we'll catch a little less sleep. Altimeter said such huge investments "in an unknown future is super-sized and terrifying, even by Silicon Valley standards". See the Top Performing Hedge-Funds > Brad Gerstner . 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. Over the last three years, Meta has also dramatically increased its capital expenses. We certainly are neither short-term traders nor activists. b***@altimeter.com. 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.. In fact, we distributed over $6 billion worth of Snowflake to our venture investors last year. 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. I have deep respect and admiration for founders that continue to grind, inspire, and invent long after the financial motivation is gone. In addition, people are confused by what the metaverse even means. Their last reported 13F filing for Q4 2022 included $3,652,571,000 in managed 13F securities and a top 10 holdings concentration of 99.95%. 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 Where's your exposure today? What is the Fed going to do? All quotes delayed a minimum of 15 minutes. 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. 2550 Sand Hill Road, Suite 150. The average tech IPOs down almost 50% from last year, SPACs much worse, direct list bad, all stocks that were taken public last year now it's clear were overvalued relative to where the world is trading them today. I have deep respect and admiration for founders that continue to grind, inspire, and invent long after the financial motivation is gone. Today, the cost of capital has radically changed, and so has Metas growth rate. 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. Board of Directors Investopedia does not include all offers available in the marketplace. I think they have to take a look at their capital allocation plan. But the fact of the matter is the entire market has evaporated around these types of stocks. Meta. 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. Chase Coleman's: Tiger Global Management. Can you tell me where that stands now and how you view stocks like that that have gotten absolutely obliterated? We dont have any demands. We believe the future lies in AI. The facts are startling. Meta shares moved 6% higher following the announcement. 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. Search ISDA ISDA fosters safe and efficient derivatives markets to facilitate effective risk . 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. He said the money the company is currently spending to develop VR could add up for a decade before it comes to fruition. "Time to Get Fit an Open Letter from Altimeter to Mark Zuckerberg (and the Meta Board of Directors).". Altimeter Capital owns approximately 0.11% of Meta. Global Business and Financial News, Stock Quotes, and Market Data and Analysis. Can it possibly be worth a trillion? Meta Platforms CEO Mark Zuckerberg speaks about the Facebook News feature at the Paley Center For Media in New York on Oct. 25, 2019. Founder & Chief Executive Officer at Altimeter Capital . So take Snowflake as an example. I'll acknowledge that Roblox and other names like that are in a much smaller, are in a much more perilous position in this market because they're not generating as much free cash as some of these other companies that I already mentioned. Please refer to the section on cookies in our Website Privacy Policy We have not made this difficult decision lightly, but after thorough, serious, and objective analysis, we feel compelled to act. 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). Sign Up. I'm not a seller. They are people with families and kids to support. We worked hard on the deal and the timing was horrific. Bill Ackman's: Pershing Square Capital Management. An estimated $100B+ investment in an unknown future is super-sized and terrifying, even by Silicon Valley standards. I don't think they can. 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. It's my job to ask you about it knowing you're not happy about it and you answered the question. This company is perfectly positioned to capitalize on that they have the, the ad network to monetize it. 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. 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. Altimeter is based in California and has about $16 billion in . Brad Gerstner is the Founder & Chief Executive Officer at Altimeter Capital based in Boston, Massachusetts. Ro $500.0M. This is a hard game. Days Trial This letter constitutes, as between each other Adhering Party and us, an Adherence Letter as referred to in the Protocol. GERSTNER: No, I didn't leave it out. If you look at the company, it's now trading at $5 billion enterprise value. In addition, people are confused by what the metaverse even means. ISDA fosters safe and efficient derivatives markets to facilitate "If the company were investing $1-2B per year into this project, then that confusion might not even be a problem.". It said Grab is expected to raise between. Chicago, IL 60606 I think, or inflation, I think they're behind the curve on recession. [3] 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. 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. PLAN. It's good to see you again. But Meta needs to get its mojo back. Brad Gerstner, Founder and CEO of Altimeter Capital; former board member of Orbitz Worldwide; Altimeter Capital Management LP. 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. We're withdrawing trillions off the Fed's balance sheet. FTX, once the third-largest centralized cryptocurrency exchange, is now in U.S. bankruptcy. Crowdfunding is the use of small amounts of capital from a large number of people to raise money or fund a business. Dont miss out on ET Prime stories! 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, its with some hesitation, but significant conviction, I am sharing an open letter strongly encouraging Meta to streamline and focus its path forward. Altimeter was founded in 2008 and is headquartered out of Boston, Massachusetts. You can learn more about the standards we follow in producing accurate, unbiased content in our. 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. 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. 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. Meta reported in February that Reality Labs lost $13.72 billion in 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. 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. Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. Right? Is it close to being done? 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. So listen, I'm not happy about it. Conforti plans to join a new firm as a co-founder with. Privacy Policy, ISDA uses cookies to enhance your experience on our website. It's a better version of Messenger. You know, I said on Twitter a few weeks ago, I don't think the Fed's behind the curve on rates. 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 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. I have been told that Amazon spent far less in total to build AWS. We think both of those are solvable. But I do believe that this company like the others that we talked about is going to be worth more in the future supported by real free cash flow. 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. All of China internet down over 80%. c/o Chairman Henry L. Meyer III Brenda Yester Baty, Head of Strategic Initiatives at Lennar Corp.; former SVP Revenue Management at Carnival Cruise Lines.
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