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. See the Top Performing Hedge-Funds > Brad Gerstner . You got a lot of this right but multiples have come down a heck of a lot to this point. We know Meta has more reach, more relevance, and more incredible opportunities for growth than almost any platform on the planet. Meta changed its company name from Facebook. 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. Musk Made a Mess at Twitter. Altimeter Capital's Brad Gerstner Issues Open Letter to Meta (META) and Meta Platforms (META) shares jumped 6% after the tech giantannouncedbig price cuts for its virtual reality (VR) headsets. 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. We think both of those are solvable. So we've taken up our exposure, we've consolidated behind our five or six best ideas, we don't run leverage and so the bet for our LPs, I'm the largest LP in the fund. This is a leading internet company in Southeast Asia. These times are what try people if you dig a hole and get into the hole here at the bottom after having lost, you know, my sense is you're locking in losses that you're going to come to regret. 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. United Continental Holdings, Inc. So were Shopify's and so were PayPal. 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. Subject: Meaningful Board Change Required Further strengthening our own conclusions, your seemingly desperate actions yesterday appear as a transparent and cynical attempt to maintain your official privileges and power, despite your long historical record of deficient oversight on behalf of stockholders. GERSTNER: Well, first let's talk about what took Facebook down, right? We're withdrawing trillions off the Fed's balance sheet. Cookies collect information about your preferences and your devices and are used to make the site work as you expect it to, to understand how you interact with the site, and to show advertisements that are targeted to your interests. Ro $500.0M. And, while most companies will struggle to monetize AI, we believe Meta is incredibly well positioned to leverage AI to make all of its existing products better. At $20-$25B of annual capex, Meta will still be investing market leading amounts to help invent the future of AI. We did not see this talk of 10 rate hikes and we certainly didn't see a war developing in Europe. Altimeter Capital - Portfolio - Index 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. To put it in perspective, Roblox was a couple percent position for us, right, and Snowflake was a 30% position for us. "Time to Get Fit an Open Letter from Altimeter to Mark Zuckerberg (and the Meta Board of Directors).". Altimeter Capital Management LP now owns 2,850,000 shares of the Internet company based in Singapore's stock worth $131,784,000 after purchasing an additional 1,600,000 shares during the last quarter. And I appreciate you being with me on the very first "Overtime" show. 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. b***@altimeter.com. Altimeter Capital Management partner Chris Conforti plans to leave the investment firm, according to people with knowledge of the matter. Grab to list in US via $40 bln merger with Altimeter Growth Top 10 Stocks Held By Altimeter Capital Management LP To put that in perspective, excluding your large metaverse investment, Meta is investing more in capex than Apple, Tesla, Twitter, Snap, and Uber combined! As always, happy to connect with you and your team. David Einhorn's: Greenlight Capital. 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? Of course, a company that connects nearly three billion users on phone and text must be investing in the next generation of communication. Some companies require tremendous capex investment to maintain their existing business. 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. Advertisement Gerstner, through Altimeter, manages over $15.0 billion worth of investments across private equity and venture capital. 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. Why 20%? With all of this said, we truly believe that the company should be making some of these important investments. However, there are few signs that VR or some of the company's metaverse apps, such as Horizon Worlds, are catching on with the public beyond early adopters. Altimeter Capital owns about 2.46 million Meta shares. Remember last year they gave a guide at the beginning of the year they're going to grow at 80%. ", Twitter. Right? 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? Drew Angerer | Getty Images News | Getty Images, Meta needs to focus on its core business, not the Metaverse, says Sand Hill's Brenda Vingiello. Q1 2021: 13 Largest Global Startup Funding Rounds - AlleyWatch I don't think there's any chance that the Fed is going to raise rates 10 times this year. Altimeter was founded in 2008 and is headquartered out of Boston, Massachusetts. Investopedia does not include all offers available in the marketplace. 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. GERSTNER: Scott, thanks for having me. Prior to Octahedron, Ram was a partner and portfolio manager at Altimeter Capital, a multi-billion dollar investment firm . Contact. Chicago, IL 60606 He argued that this was "one of the big reasons behind these price cuts.". 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. About Altimeter Capital Altimeter and PAR believe these experienced professionals can bring meaningful experience, objective oversight, and powerful change to United. The technology-focused hedge fund with a 0.1% ownership claimed that the company had lost investor confidence as it increased . It makes no sense to me, but that is the risk that you run. 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. The deal values the combined company at $35 billion and will. 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. 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. Unlock your 30 days free access to ETPrime now. Background [ edit] In 2008, Brad Gerstner founded Altimeter Capital in Boston, Massachusetts. When you look at these questions, it comes down to this. Altimeter Growth Corp., the blank-check company merging with internet giant Grab Holdings Inc., is hovering just a few cents above its record low after cratering 28% since the deal was unveiled in . You would simply do R&D quietly and investors would focus on the core business and the breakthroughs in AI. Your Reason has been Reported to the admin. 2499 1749, Monthly We believe in this team. Meta has also been feeling pressure to improve the finances of its Reality Labs, the company's metaverseunit, which includes the VR headsets. Chief Executive Officer 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. In fact, we distributed over $6 billion worth of Snowflake to our venture investors last year. Tech SPAC Altimeter Growth Corp. 2 prices further upsized $400 million We didn't think that was durable. We know Meta has more reach, more relevance, and more incredible opportunities for growth than almost any platform on the planet. That could in fact become a tailwind as we get to the back half of the year. Congrats on the new show. What is the connection between those three companies. Right? If the deal goes through, it. At the start of COVID on March 26th when I felt about like I do today, growth stocks were under assault. Altimeter Capital Management, LLC - Brad Gerstner - TipRanks In short, Meta needs to get fit and focused. We've never seen on the order of magnitude of the Marshall Plan at the beginning of COVID. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. 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. "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. It lost $5.8 billion in the first six months of the year. UPDATE: Altimeter Capital, PAR Capital Issue Letter to United They're fearful about the war. 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. 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. PAR Capital Management, Inc. Do Not Sell My Personal Data/Privacy Policy. He also asked Zuckerberg to cut down on capex and employee expenses. 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. Email. I think that this is a business that is investing in the right things. Or it's well over a trillion, Microsoft 3 trillion. Altimeter Capital Fund Manager Profile | Preqin Altimeter Capital partner Kevin Wang led the firm's investment in cloud data platform Snowflake in 2015 in its $45 million Series C round; he sat on its board until 2020. We can just go through the list, Uber, Facebook, Roblox. I don't think Mark did a particularly good job of explaining the meta investments. Potential Choices for HF Roles from Undergrad | Wall Street Oasis "Jitesh Ubrani: Tweet From March 3, 2023. And so that will be rolled out in Q2 and Q3. These include white papers, government data, original reporting, and interviews with industry experts. I don't think they can. Before we we move, what do I do with Facebook? GERSTNER: Scott, I love that you asked the question. Read More . ET on GuruFocus.com Builders Union LLP Buys AppLovin Corp, Match. The facts are startling. Airline Industry Veteran Gordon Bethune Leads Stockholder-Nominated Conclusion A Leaner, Faster, More Successful Meta. 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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. It can do that by making. 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. Login Updated on September 30, 2022. But far from being a bad decision, 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. In the back half, you've already lapped IDFA, in the back half of this year, the supply chain issues begin to ameliorate. 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. 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. Brad Gerstner's Phone Number and Email Last Update. What is the rate of increase? 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. In the letter, Gerstner said Altimeter Capital doesn't have demands and simply wants to engage with Meta management. Search ISDA ISDA fosters safe and efficient derivatives markets to facilitate effective risk . 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. Two years from now, people are going to be looking back and say, why the hell didn't you buy Snowflake at 160 bucks a share? Copyright 2023 Bennett, Coleman & Co. Ltd. All rights reserved. Meta didn't immediately respond to a request for comment. 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. 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. Bruce Berkowitz's: Fairholme Capital Management. Headquarters Location One International Place Suite 2400 Boston, Massachusetts, 02110, United States 617-310-6180 Suggest an edit 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. Getting Fit Headcount Reduction / Expense Control. Our best guess is that maintenance capex for Meta is less than $10B annually. Brad Gerstner is the Founder & Chief Executive Officer at Altimeter Capital based in Boston, Massachusetts. We know they have high EBITDA margins on the rideshare business which is dominant across the region. Altimeter LLC. 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 agree to pay a one-time fee of $500 to ISDA at or before the submission of this Adherence Letter. Meta Slashes Prices for VR Headsets 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. Reels, which is a massive product is going to increase its monetization between now and the end of the year. Based on yesterday's announcement, it seems the Board now agrees that for many years it operated with a suboptimal composition. Data is a real-time snapshot *Data is delayed at least 15 minutes. It's good to see you again. With all of this said, we truly believe that the company should be making some of these important investments. 3,30,700 crore) if it cut headcount by at least 20 percent, trimmed capital expenditure by at least $5 billion (roughly Rs. 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. Meta and other large companies have made it very difficult for start-ups to hire. And, while most companies will struggle to monetize AI, we believe Meta is incredibly well positioned to leverage AI to make all of its existing products better. 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WAPNER: I want to take a look at the stock in "Overtime" here because I think you're moving in I'm looking at what looks to be a higher move as we're having this conversation and that brings me frankly, now to Facebook. Usually you don't capitalize after a colon, but there are exceptions.