GERSTNER: Without a doubt the single biggest lever on growth multiples is rates. 2550 Sand Hill Road, Suite 150. Read More . 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. 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? So you know, when I look at what's going on in the business and I try to distill it from the noise, which is what has made us good for 20 years, not following the crowd, not panicking, but really looking at the business. Can it possibly be worth a trillion? Right. We know Meta has more reach, more relevance, and more incredible opportunities for growth than almost any platform on the planet. "In short, Meta needs to get fit and focused.". 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. [3] In the back half, you don't have those same comp issues that you have caused by COVID. Altimeter Capital Management is an investment firm with offices in Menlo Park, CA, and Boston, MA. 2023 International Swaps and Derivatives Association, Inc. We certainly our base case, as you know, was a soft landing four to five rate hikes into this year. 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. Our best guess is that maintenance capex for Meta is less than $10B annually. 233 South Wacker Drive 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. March 2013 Protocol ALID: 66704. Finally, Prudential PLC lifted its . BRAD GERSTNER: Hey, Scott, thanks for having me. Musk Made a Mess at Twitter. Altimeter Capital Management LP lifted its position in shares of SEA by 128.0% during the first quarter. 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. Where's your exposure today? Altimeter Capital Management is a hedge fund with 17 clients and discretionary assets under management (AUM) of $17,950,309,162 (Form ADV from 2022-05-27). The conventional wisdom press and investor is that the core business hit a wall last fall. 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. 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Right? 9/29/2022 1:05 AM. Unlock your 30 days free access to ETPrime now. 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. Headquarters Location One International Place Suite 2400 Boston, Massachusetts, 02110, United States 617-310-6180 Suggest an edit 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. The full text of the stockholder letter to the United Board follows: March 8, 2016. Do they want to stand with me and ride that out? 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. It's my job to ask you about it knowing you're not happy about it and you answered the question. Copyright 2023 Bennett, Coleman & Co. Ltd. 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. 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Altimeter Capital owns a stake of about $320 million, according to the Wall Street Journal, but that only equates with a 0.1% share of the company, according to Meta's latest filings with the. Altimeter Capital Chair and CEO Brad Gerstner, in an open letter to the company, said Meta has too many employees and is moving too slowly to retain the confidence of investors. But you also (sometimes) capitalize the first word of a quote. They are people with families and kids to support. Altimeter Capital's Brad Gerstner Issues Open Letter to Meta (NASDAQ: META) and Mark Zuckerberg. With that said, we have a shortage of talent in Silicon Valley. That's because enterprises love their product. And, while most companies will struggle to monetize AI, we believe Meta is incredibly well positioned to leverage AI to make all of its existing products better. Founder & Chief Executive Officer at Altimeter Capital . And frankly, I was going to play some sound from you from our Delivering Alpha event last September where you called a lot of this but I don't even have to do that anymore because you just went through it. And I think they have to execute against the underlying operations in the business. From Grand Teton to Universal Speech Translator to Make-A-Video, we are witnessing a Cambrian moment in AI, and Meta is no doubt well positioned to help invent and monetize that future. Altimeter Capital Management LP Info Size ($ 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. It said Grab is expected to raise between. WAPNER: Okay, that's a that's a big a bold call. How big is that market? 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. 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. I think that this is a business that is investing in the right things. Board of Directors c/o Chairman Henry L. Meyer III United Continental Holdings, Inc. . And we are confident that your long-term investments in AI and the next generation of communications will continue to drive us all forward. But the fact of the matter is the entire market has evaporated around these types of stocks. I imagine they're going to be super aggressive about how they're buying back shares. 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. Meta. You do, you do great work, excited for the new show and let's stay after it. Brad Gerstner is the Founder & Chief Executive Officer at Altimeter Capital based in Boston, Massachusetts. 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. 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. 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. 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. To put it in perspective, Roblox was a couple percent position for us, right, and Snowflake was a 30% position for us. Getting Fit Headcount Reduction / Expense Control. 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. Metas core business is one of the largest and most profitable in the world with over $45 B in operating profits last year alone. The facts are startling. Worse, this skepticism seemed to be affirmed with a nearly-immediate and sizable miss in financial results and continued under-performance throughout 2022. Altimeter Capital Management LLC. Steven Cohen's: Point72 Asset Management. They may never get back to the levels at which they traded before. I think you're gonna see monetization gains against IDFA and either way we lap that issue in Q3 and Q4. At $20-$25B of annual capex, Meta will still be investing market leading amounts to help invent the future of AI. Barney Harford, former CEO of Orbitz Worldwide; former board member of Orbitz Worldwide and eLong; In addition, people are confused by what the metaverse even means. We were about 30% to 40% depending upon which basket you looked at software internet above the five-year average. So these are different order of magnitude bets. 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. 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. 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. They're fearful about the war. The silver lining is that unlike many companies, this popular narrative obscures the truth. Background [ edit] In 2008, Brad Gerstner founded Altimeter Capital in Boston, Massachusetts. 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. 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. [2] The firm focuses on technology investments in both public and private markets globally. 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 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. The bet . So I think they got to match the investment to the revenue growth of the business. Southeast Asian superapp Grab is likely to set a world record by selling itself into a special purpose acquisition company, or SPAC, run by U.S. tech venture capital investors Altimeter Capital . All rights reserved. Open letter: Altimeter Capital founder and CEO Brad Gerstner encourages Meta to cut capex by $5B+, cut headcount by 20%+, and limit metaverse R&D to $5B/year As you know, we are long-term shareholders. will trigger a new window or tab to open. Brad Gerstner founded the. At $20-$25B of annual capex, Meta will still be investing market leading amounts to help invent the future of AI. It takes effect in 2023. Altimeter. Can you tell me where that stands now and how you view stocks like that that have gotten absolutely obliterated? 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. I mean, we're talking about billions of dollars in revenue but you left that out. And we've had government intervention of the magnitude. What is the Fed going to do? Are you as optimistic today as you were in months past? Altimeter Capital Management, ISDA 2021 SBS Top-Up Protocol - Adherence. That's the asymmetry. 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. 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. Over the last three years, Meta has also dramatically increased its capital expenses. Altimeter's nominees are: I think if you said why might these numbers have to come down if we're heading into a recession, the numbers are likely to come down. As I look at it, the market is now pricing in at least seven rate hikes. In fact, we believe that augmented and artificial intelligence has the potential to drive more economic productivity than the internet itself. I remember people asking that question about Amazon. In the last 18 months, Meta stock is down 55% (compared to an average of 19% for its big-tech peers). If multiples expand then you have even more upside. At the end of the second quarter this year, Altimeter Capital held more than 2 million shares of Meta. Nobody debates whether or not this company is going to be more valuable in the future. I have been told that Amazon spent far less in total to build AWS. 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. GERSTNER: Scott, I love that you asked the question. Mark Zuckerberg is a self-made billionaire and the CEO of Meta (formerly Facebook), which he co-founded in his dorm room in 2004. 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 They are people with families and kids to support. Altimeter Capital Management partner Chris Conforti plans to leave the investment firm, according to people with knowledge of the matter. 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. Conforti plans to join a new firm as a co-founder with former Whale Rock Capital Management partner Kristov Paulus, said one of the people, who asked not to be identified because the information is private. You know how to time markets. I think we spent about an hour together. Based on yesterday's announcement, it seems the Board now agrees that for many years it operated with a suboptimal composition. 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. Whatever the reason, that is certainly the perception. . You probably know you should capitalize proper nouns and the first word of every sentence. This is expected to facilitate trade as the West ratchets up sanctions on Russia. That's what makes markets. WAPNER: Man, I love how honest you are and I know our viewers do as well. See the Top Performing Hedge-Funds > Brad Gerstner . The deal values the combined company at $35 billion and will. Drew Angerer | Getty Images News | Getty Images, Meta needs to focus on its core business, not the Metaverse, says Sand Hill's Brenda Vingiello. These include white papers, government data, original reporting, and interviews with industry experts. 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. Updated on September 30, 2022. Altimeter.com is Altimeter's only website. We're withdrawing trillions off the Fed's balance sheet.