altimeter capital letter
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. Why didn't you buy, you know, Uber at 28 bucks a share? Data is a real-time snapshot *Data is delayed at least 15 minutes. Investopedia does not include all offers available in the marketplace. Is it done? In the letter, Gerstner said Altimeter Capital doesn't have demands and simply wants to engage with Meta management. A ltimeter Growth Corp. 2, the second blank check company formed by Altimeter Capital targeting the tech sector, filed on Thursday with the SEC to raise up to $200 million in an initial public. CAPEX Investing Aggressively and Responsibly in the Future of AI. See the Top Performing Hedge-Funds > Brad Gerstner . 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. The Singaporean rideshare giant Grab is set to merge with the SPAC Altimeter Growth 1, according to a report from The Financial Times. We dont have any demands. Altimeter Capital Management, ISDA 2021 SBS Top-Up Protocol - Adherence. committed hundreds of millions of dollars to Sequoia Capital, Altimeter Capital Management and Multicoin . See here for a complete list of exchanges and delays. So I am very unhappy because I've lost money on the deal. Choose your reason below and click on the Report button. I can't tell you what's going to happen the next three days or the next three weeks or even three months. This is a business it's grown, it's trading at 28 times free cash flow with 20% growth, that will continue to compound. 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. By any normal company or start up standard, $5 B per year would seem like an extraordinary amount. 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. Read More . According to Hedge Follow, it was authored by Brad Gerstner, CEO and founder of technology investment firm Altimeter Capital. An estimated $100B+ investment in an unknown future is super-sized and terrifying, even by Silicon Valley standards. They may never get back to the levels at which they traded before. My bet is we're gonna have less this year. It's a better version of Messenger. We have no stimulus checks. 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. 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. With all of this said, we truly believe that the company should be making some of these important investments. Altimeter. We hereby appoint ISDA as our agent for the limited purposes of the Protocol Agreement and accordingly we waive, and hereby release ISDA from, any rights, claims, actions or causes of action whatsoever (whether in contract, tort or otherwise) arising out of or in any way relating to this Adherence Letter or our adherence to the Protocol Agreement or any actions contemplated as being required by ISDA. Social networking is the use of internet-based social media platforms to make connections and share various media with friends, family, colleagues, or customers. For reprint rights: Continue reading with one of these options: Login to get access to some exclusive stories, Get access to exclusive stories, expert opinions &, Valid only with UPI, Credit & Debit Cards Autopay, Inciting hatred against a certain community, 15 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. We know they have high EBITDA margins on the rideshare business which is dominant across the region. Altimeter Capital Management, LP Buys Opendoor Technologies Inc, Toast Inc, Duolingo Inc, Sells . Headquarters Location One International Place Suite 2400 Boston, Massachusetts, 02110, United States 617-310-6180 Suggest an edit Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more! Altimeter was founded in 2008 and is headquartered out of Boston, Massachusetts. WAPNER: I know I know you're not happy about it. I think that this is a business that is investing in the right things. What's going to be the inflation print in April? The firm's private equity arm makes all-stage venture capital investments, primarily in the technology sector. All Rights Reserved. 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. So, it doesn't surprise me at all that buyers are on the sidelines and that sellers and short sellers are having a field day with stocks. 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. PAR Capital Management, Inc. Do Not Sell My Personal Data/Privacy Policy. 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). Before we we move, what do I do with Facebook? They're building their own ad platform, right, that can deal with this. I mean, we're talking about billions of dollars in revenue but you left that out. Portfolio Gain +273.45%. Market Research. 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. That could in fact become a tailwind as we get to the back half of the year. 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. 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. The conventional wisdom press and investor is that the core business hit a wall last fall. All of China internet down over 80%. Can they maintain their growth momentum? 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. Your P/E ratio has fallen from 23x to 12x and now trades at less than half the average P/E of your peers. Kultura Capital Management is being structured as a hybrid fund that will focus on late-stage tech startups as well as public companies, the person said. 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. Capitalizing on the fund's VC success, Gerstner raised $450M for Altimeter Growth Corp (AGCUU), a blank check company IPO targeting the tech sector. The offers that appear in this table are from partnerships from which Investopedia receives compensation. The stock is 51% off of its high. I'm going to own these companies, there are a handful of select companies that are free cashflow positive that are going to be worth more in the future. Altimeter Capital Management LLC. It's interesting that now today you say we're in the neighborhood of a tradable bottom. 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 Fed going to do? Rates are going up and we have a war. 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. Get your daily dose of business updates on WhatsApp. Can it possibly be worth 100 billion? Neither Altimeter, nor any of its affiliates or personnel, offers investment advisory services via the internet. We believe in this team. 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. On top of that we had supply chain challenges. David Einhorn's: Greenlight Capital. If multiples expand then you have even more upside. I have been told that Amazon spent far less in total to build AWS. 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. Congrats on the new show. The last 10 years have been a unique time in tech and for Meta. The vast majority of the capex has been an essential and high-returning investment in data centers, Nvidia GPUs and other AI resources to solidify the companys position as one of worlds leaders in AI. ", Twitter. Can you tell me where that stands now and how you view stocks like that that have gotten absolutely obliterated? 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%. 2,06,700 crore) a year and capped annual investment in the metaverse to $5 billion (roughly Rs . I imagine they're going to be super aggressive about how they're buying back shares. Advertisement Gerstner, through Altimeter, manages over $15.0 billion worth of investments across private equity and venture capital. And so we're getting hurt like everybody else. "In short, Meta needs to get fit and focused.". I have deep respect and admiration for founders that continue to grind, inspire, and invent long after the financial motivation is gone. We'll see you soon. 2023 CNBC LLC. 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%. 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. The bet . We're down on the year. At Meta, the number of employees is up over 3x from 25k to 85k employees in just the last four years! He said the money the company is currently spending to develop VR could add up for a decade before it comes to fruition. 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. will trigger a new window or tab to open. 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. It's our largest position we're not selling but we acknowledge that it's been rough for our investors, rough for us. United has an Underqualified, Ineffective, and Entrenched Board: While presiding over United's stunning long-term underperformance, we believe that the incumbent Board (and a majority of the newly-expanded 15-person Board): (1) lacks sufficient leadership, expertise, and experience to challenge management and hold management accountable, to direct an operational and financial turn-around, and to maximize stockholder value; (2) has entrenched itself by implementing various mechanisms to financially penalize stockholders for making meaningful Board changes; (3) has failed to adequately align management compensation with stockholder interests; and (4) is too stale to effectively represent stockholders. So were Shopify's and so were PayPal. Or it's well over a trillion, Microsoft 3 trillion. Worse, this skepticism seemed to be affirmed with a nearly-immediate and sizable miss in financial results and continued under-performance throughout 2022. articles a month for anyone to read, even non-subscribers! After all, why not hire more people and invest in more things when the cost of capital was near zero and growth seemed unlimited? Brad Gerstner Over time, we intend to share with United's stockholders our detailed analysis, which has led us to conclude, among other things, that: We don't think we're going to have 10 rate hikes and we do think there'll be an off ramp to the situation in Ukraine. We didn't think that was durable. $6.9 M. Why 20%? Tesla recalls 3,470 Model Y vehicles over loose bolts, Exclusive: Nvidia's plans for sales to Huawei imperiled if U.S. tightens Huawei curbs-draft, Reporting by Akash Sriram in Bengaluru; Editing by Arun Koyyur and Anil D'Silva, Mexico can't match U.S. incentives for proposed Tesla battery plant, minister says, Taiwan's TSMC to recruit 6,000 engineers in 2023, Exclusive: Snapchat kicks few children off app in Britain, data given to regulator shows, Exclusive news, data and analytics for financial market professionals. click here! We think both of those are solvable. Focusing the Metaverse: the Next Generation of Communication and Collaboration. We also reference original research from other reputable publishers where appropriate. 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. 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. 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. So take Snowflake as an example. So we're in the neighborhood of a tradable bottom. Got a confidential news tip? It's our largest position in the book. 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. Brad Gerstner, Founder and CEO of Altimeter Capital; former board member of Orbitz Worldwide; You probably know you should capitalize proper nouns and the first word of every sentence. We can just go through the list, Uber, Facebook, Roblox. About Kevin Wang. They are people with families and kids to support. c/o Chairman Henry L. Meyer III Altimeter Capital Management LP lifted its position in shares of SEA by 128.0% during the first quarter. Based on yesterday's announcement, it seems the Board now agrees that for many years it operated with a suboptimal composition. I have deep respect and admiration for founders that continue to grind, inspire, and invent long after the financial motivation is gone. Altimeter Capital owns about 2.46 million Meta shares. Panel led by former SC judge to include NaBFID chair KV Kamath and Infys Nandan Nilekani. To put that in perspective, excluding your large metaverse investment, Meta is investing more in capex than Apple, Tesla, Twitter, Snap, and Uber combined! 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. The stock today hit a new low under $3. The silver lining is that unlike many companies, this popular narrative obscures the truth. . International Swaps and Derivatives Association. It's down 32% in the last 11 months ,that ranks it in the top three of the last 20 years in terms of drawdowns. 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. 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%. 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. 2023 Benzinga.com. To put it in perspective, Roblox was a couple percent position for us, right, and Snowflake was a 30% position for us. Benzinga does not provide investment advice. ISDA fosters safe and efficient derivatives markets to facilitate effective risk management for all users of derivative products. I'm not a seller. What is the rate of increase? As you know, we have attempted to work collaboratively with the current Board to meaningfully improve governance, Board composition, and oversight. Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. Protocol: The move comes amid a decline in Meta's VR shipments and pressure from activist shareholders to improve the financial picture of its metaverse division. Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. Over the last three years, Meta has also dramatically increased its capital expenses. We're withdrawing trillions off the Fed's balance sheet. If you really think about what the metaverse is in the first instance, it's a better version of what you and I are doing right here. 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. In fact, we believe that augmented and artificial intelligence has the potential to drive more economic productivity than the internet itself. Altimeter Capital Management, LP ("Altimeter") is an SEC-registered investment adviser. 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. And so that will be rolled out in Q2 and Q3. Altimeter Capital owns approximately 0.11% of Meta. And notably, this decline in share price mirrors the lost confidence in the company, not just the bad mood of the market. 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. "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. Limit investment in metaverse / Reality Labs to no more than $5B per year. Worse, this skepticism seemed to be affirmed with a nearly-immediate and sizable miss in financial results and continued under-performance throughout 2022. Recently Active; Top Discussions; Best Content; WSO Media; BY INDUSTRY; Investment Banking ET on GuruFocus.com Builders Union LLP Buys AppLovin Corp, Match. for a description of how we use cookies. Meta and other large companies have made it very difficult for start-ups to hire. 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. Stock Radar: 19% from Budget Day! 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). How many increases? 10. 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. What Does Metaverse Mean and How Does This Virtual World Work? Some companies require tremendous capex investment to maintain their existing business. The firm also considers investments in the consumer products and services, gaming, retail, and transportation sectors. We've destroyed over $15 trillion of stock market wealth. Meta Platforms (META) shares jumped 6% after the tech giantannouncedbig price cuts for its virtual reality (VR) headsets. 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. Our Standards: The Thomson Reuters Trust Principles. So I think they got to match the investment to the revenue growth of the business. Metas core business is one of the largest and most profitable in the world with over $45 B in operating profits last year alone. Altimeter Capital's Brad Gerstner Issues Open Letter to Meta (NASDAQ: META) and Mark Zuckerberg. 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. But as you know, in the first three months of this year, all the high-quality stocks are being destroyed as well. NEW YORK, Nov. 16, 2021 (GLOBE NEWSWIRE) -- H1, which provides the largest global healthcare network that connects healthcare professionals, announced today that it has raised a $100M Series C. 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. Revenue. 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. 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: In the last 18 months, Meta stock is down 55% (compared to an average of 19% for its big-tech peers). Think about this, Scott. Search ISDA ISDA fosters safe and efficient derivatives markets to facilitate effective risk . We believe the future lies in AI. I think the only debate is what is the multiple going to be in three months, in six months, in nine months. It added that VR is "a powerful social platform and creative technology, and the more people with access to it, the better. In addition, people are confused by what the metaverse even means. Following is the unofficial transcript of a CNBC exclusive interview with Altimeter Capital Founder & CEO Brad Gerstner on CNBC's "Closing Bell: Overtime" (M-F, 4PM-5PM ET) today, Monday, March 14th for the premiere. Meta. Meta has spent billions and hired thousands of employees around the world to build the metaverse, which refers to a shared digital environment that uses augmented or virtual reality technology to make it feel more realistic. We believe that our conclusion is shared by many of United's long-suffering stockholders, customers, and 80,000+ dedicated employees. Rapid mobile adoption helped market leaders blaze through the s-curve with astounding growth rates and a historically low cost of capital made investments in people and things the rational economic decision. 3,30,700 crore) if it cut headcount by at least 20 percent, trimmed capital expenditure by at least $5 billion (roughly Rs. We simply wanted to further engage and continue sharing our thoughts as an interested shareholder. GERSTNER: So, Scott that you know the top six names in our book are all companies that we believe are, you know, both accelerating, expanding margins, expanding free cash flow margins, right, and that are critically important and will be worth more in the future. GERSTNER: Scott, I love that you asked the question. Brad Gerstner is the Founder & Chief Executive Officer at Altimeter Capital based in Boston, Massachusetts. 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. It will get there three years from now because it's free cash flow margin will continue to expand and if you just get it, give it the multiples that are currently in the market, right, that have already drawn down on free cash flow, you get to that 3X that I quoted. Updated on September 30, 2022. And so for us, it's about simplification, reduction of gross and making sure that you consolidate that what you own into your highest conviction ideas whether you're playing at home in your 401k or whether you're doing this professionally. 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. These are not numbers on a spreadsheet. If the company were investing $12B per year into this project, then that confusion might not even be a problem. Altimeter Capital Management, LLC a Portfolio Activity as reported in the most recent 13F form published on Dec 31, 2022. Are you as optimistic today as you were in months past? Conforti plans to join a new firm as a co-founder with. The full text of the stockholder letter to the United Board follows: March 8, 2016. It massively distorted multiples on the way in and it's massively distorting multiples on the way out. With that said, we have a shortage of talent in Silicon Valley. If you look at the company, it's now trading at $5 billion enterprise value. It's a better version of Zoom. At first glance, the rules of English capitalization seem simple. 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: Reduce headcount expense by at least 20%;Reduce annual capex by at least $5 B from $30B to $25B; andLimit investment in metaverse / Reality Labs to no more than $5B per year. 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. 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. 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. You do, you do great work, excited for the new show and let's stay after it. "An estimated $100B+ investment in an unknown future is super-sized and terrifying, even by Silicon Valley standards," Gerstner wrote. Indias general insurers are looking to set up a larger marine insurance pool to cover the risks of transporting crude oil, edible oil, project machinery and fertiliser from the war-torn Russia-Ukraine region. Why 20%? In fact, we believe that augmented and artificial intelligence has the potential to drive more economic productivity than the internet itself. 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. There is no doubt that doubling annual FCF will improve share price. Whatever the reason, that is certainly the perception. This lack of focus and fitness is obscured when growth is easy but deadly when growth slows and technology changes. Nobody debates whether or not this company is going to be more valuable in the future. 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. Conclusion A Leaner, Faster, More Successful Meta. 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. This is a region of 700 million plus people. Altimeter Capital Management LP. The letter is the latest sign that Meta investors are starting to express reservations about the company's recent performance. It lost $5.8 billion in the first six months of the year. The reductions for the Quest Pro start March 5 in the U.S. and Canada, and on March 15 in other countries where it is supported. 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.
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