Despite public skepticism at times warranted we have been supporters 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. To put that in perspective, excluding your large metaverse investment, Meta is investing more in capex than Apple, Tesla, Twitter, Snap, and Uber combined! Please refer to the section on cookies in our Website Privacy Policy ", Medium.com. By any normal company or start up standard, $5 B per year would seem like an extraordinary amount. Advertisement Gerstner, through Altimeter, manages over $15.0 billion worth of investments across private equity and venture capital. Our contact information, solely for purposes of this Adherence Letter (and unrelated to the Questionnaire delivery options in the subsequent section) is: We consent to the publication of a conformed copy of this letter by ISDA and to the disclosure by ISDA of the contents of this letter. 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. 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. It's good to see you again. We've never seen on the order of magnitude of the Marshall Plan at the beginning of COVID. 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. 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. So I think they got to match the investment to the revenue growth of the business. 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. ISDA fosters safe and efficient derivatives markets to facilitate effective risk management for all users of derivative products. Altimeter Growth Corp. raised $450 million in an October 2020 IPO. 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. c/o Chairman Henry L. Meyer III In short, Meta needs to get fit and focused. ", Jitesh Ubrani of market research firm IDCpointed outthat Meta's year-over-year VR shipments plunged 93% in the fourth quarter, while those of Pico from rival ByteDance rose 110%. 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. Altimeter Capital's Brad Gerstner Issues Open Letter to Meta (NASDAQ: META) and Mark Zuckerberg. Can it possibly be worth 200 billion? Credit Derivatives Determinations Committees, how to enable 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. Right? We didn't think that was durable. But listen, there's massive uncertainty in the world. Protocol: Congrats on the new show. The metaverse is a shared virtual environment with aspects of online gaming, augmented reality, and more that people can access via the Internet. "Jitesh Ubrani: Tweet From March 3, 2023. Over the last three years, Meta has also dramatically increased its capital expenses. About Altimeter Capital Barney Harford, former CEO of Orbitz Worldwide; former board member of Orbitz Worldwide and eLong; To read full story, subscribe to ET Prime, Billed annually at 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? I remember people asking that question about Amazon. 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). 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. Moreover, I am a strong supporter of founder-led companies especially when they have your successful track record of seeing the future. When you visit the site, Dotdash Meredith and its partners may store or retrieve information on your browser, mostly in the form of cookies. 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. "Meta Reports Fourth Quarter and Full Year 2022 Results," Page 10. 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. Panel led by former SC judge to include NaBFID chair KV Kamath and Infys Nandan Nilekani. 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. What do you think? 2550 Sand Hill Road, Suite 150. Altimeter said annual free cash flow can be doubled to $40 billion (roughly Rs. The firm also considers investments in the consumer products and services, gaming, retail, and transportation sectors. And notably, this decline in share price mirrors the lost confidence in the company, not just the bad mood of the market. 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. 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. All rights reserved. We have not made this difficult decision lightly, but after thorough, serious, and objective analysis, we feel compelled to act. 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. It's a better version of Messenger. 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%. The silver lining is that unlike many companies, this popular narrative obscures the truth. 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. We think both of those are solvable. 3,30,700 crore) if it cut headcount by at least 20 percent, trimmed capital expenditure by at least $5 billion (roughly Rs. Altimeter LLC. Email. Despite public skepticism at times warranted we have been supporters of the companys strategy to continuously reinvest in a product-led future and its mission to make the world more open and connected. Altimeter's nominees are: 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. Warren Buffett's: Berkshire Hathaway. 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. 2-Year 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. 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. 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. 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. Unlock your 30 days free access to ETPrime now. And notably, this decline in share price mirrors the lost confidence in the company, not just the bad mood of the market. International Swaps and Derivatives Association. Grab Holdings is reportedly in talks to go public through a merger with a "blank check" company that could value the Southeast Asian ride-hailing startup at as much as . We are generally patient investors. So if you want to bet on the future of growth, Southeast Asia is one of the places you want to bet this is one of the dominant brands, dominant internet platforms, and it's got 7 billion of cash on the balance sheet. 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This lack of focus and fitness is obscured when growth is easy but deadly when growth slows and technology changes. The stock is 51% off of its high. $6.9 M. Right? SPACs notched more than $70 billion so far in 2021, a new record. Data is a real-time snapshot *Data is delayed at least 15 minutes. . Market Research. We believe in this team. All Rights Reserved. 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: committed hundreds of millions of dollars to Sequoia Capital, Altimeter Capital Management and Multicoin . 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. 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. 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. I mean, we're talking about billions of dollars in revenue but you left that out. Sincerely, The Digital Markets Act (DMA) is a groundbreaking European law designed to rein in the power of the gatekeepers of the digital economy. But it's good to be here and and you know, while I think we we did see the normalization and multiples as a likely outcome toward the end of last year. GERSTNER: No, I didn't leave it out. 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. 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. But Meta needs to get its mojo back. JavaScript in your web browser. I'm not a seller. Altimeter Capital Management, LLC. Days Trial We were wrong. 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. I think we spent about an hour together. Altimeter Capital owns about 2.46 million Meta shares. I have been told that Amazon spent far less in total to build AWS. How big is that market? 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. With all of this said, we truly believe that the company should be making some of these important investments. [2] The firm focuses on technology investments in both public and private markets globally. If you look at the company, it's now trading at $5 billion enterprise value. 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 believe in this team. Louis Bacon's: Moore Capital Management. 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. This is a business it's trading at 12 times free cash flow, X the meta investment and 18 times including. It makes no sense to me, but that is the risk that you run. Prior to Octahedron, Ram was a partner and portfolio manager at Altimeter Capital, a multi-billion dollar investment firm . 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. Your Reason has been Reported to the admin. But what is the right amount? 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. Can they maintain their growth momentum? But Meta needs to get its mojo back. So these are different order of magnitude bets. United Urgently Needs a Course Correction: United's stockholders, customers, and employees deserve better Board governance, better Board leadership, and better Board performance. 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. Its competitor or not its competitor, its closest comp in Southeast Asia Sea Limited is also down over 70%.
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