In the last 18 months, Meta stock is down 55% (compared to an average of 19% for its big-tech peers). All quotes delayed a minimum of 15 minutes. 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%. I expected that as the world of normalized post Omicron that we would get back to the five-year average multiple. 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. "New Prices for Meta Quest 2s 256GB SKU + Meta Quest Pro. Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. Meta (Facebook) Begins Biggest Layoffs in Company's History, Meta (META) Connect Conference Key Takeaways, Meta (Facebook) Shares Slammed as Earnings, Spending Disappoint. Altimeter LLC. At the same time that Meta ramped up spend, you lost the confidence of investors. August 2012 Protocol ALID: 66703 They're fearful about what's going to happen with rates. Meta Platforms, which is set to report third-quarter results on Wednesday after markets close, declined to comment. 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. So I think they got to match the investment to the revenue growth of the business. We have no stimulus checks. 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. Do they want to stand with me and ride that out? Meta can get its mojo back, says Brad Gerstner, but it will have to take some hard decisions first. Instead, they grew at 106%. So no, these issues are rea,l what's going on in Russia is real, what's going on in Europe is real. 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. 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. They were cratering ironically, now we're normalizing and growth stocks are down even more than they were at the start of COVID. By any normal company or start up standard, $5 B per year would seem like an extraordinary amount. Altimeter Capital Management, LLC a Portfolio Activity as reported in the most recent 13F form published on Dec 31, 2022. 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. I don't think they can. Of course, a company that connects nearly three billion users on phone and text must be investing in the next generation of communication. 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. Meta. Please refer to the section on cookies in our Website Privacy Policy 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. Will His AI Plans Be Any Different? In short, Meta needs to get fit and focused. Its competitor or not its competitor, its closest comp in Southeast Asia Sea Limited is also down over 70%. Altimeter Capital Chair and CEO Brad Gerstner said in an open letter to the company and CEO Mark Zuckerberg on Monday that Meta has too many employees and is moving too slowly to retain the confidence of investors. There is no doubt that doubling annual FCF will improve share price. In fact, we distributed over $6 billion worth of Snowflake to our venture investors last year. I imagine they're going to be super aggressive about how they're buying back shares. So we're in the neighborhood of a tradable bottom. With SNOW currently trading at $242, that stake is now worth $8.8 billion. Ray Dalio's: Bridgewater Associates. 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. Altimeter Capital Management, LP for a description of how we use cookies. 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. 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. GERSTNER: No, I didn't leave it out. Finally, Prudential PLC lifted its . As always, happy to connect with you and your team. Think about this, Scott. If Meta was able to control those costs, he said, then it could double its free cash flow and improve its share price. 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 And what is going to be the resolution to the situation in the Ukraine? Everybody knows we've been in this company for a long time. We were wrong. CAPEX Investing Aggressively and Responsibly in the Future of AI. Altimeter Capital Management is an investment firm with offices in Menlo Park, CA, and Boston, MA. Right? The Wall Street Journal reported on Thursday that Grab was in talks with Altimeter. Samooha, a startup developing a "cross-cloud" data collaboration platform, today announced that it raised $12.5 million in a funding tranche backed by Altimeter Capital and Snowflake Ventures . They're building their own ad platform, right, that can deal with this. We know they have high EBITDA margins on the rideshare business which is dominant across the region. ", 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%. Altimeter Capital Management is a technology focused investment firm based in Menlo Park, CA and Boston, MA. We want to hear from you. All of China internet down over 80%. Market Research. 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. Skip to main content. It's been a half century since Australia and China established formal relations, but neither side is really celebrating. Days Trial Nobody debates whether or not this company is going to be more valuable in the future. Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts. 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. Altimeter is based in California and has about $16 billion in . We've never seen on the order of magnitude of the Marshall Plan at the beginning of COVID. To read full story, subscribe to ET Prime, Billed annually at Read More . Experience Your Economic Times Newspaper, The Digital Way! The firm also considers investments in the consumer products and services, gaming, retail, and transportation sectors. 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 didn't think that was durable. FREE Breaking News Alerts from StreetInsider.com! 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. Enjoy a 7-Day Free Trial Thru Feb 17, 2023! He left GC and became co-CEO of NLG, an early online travel start-up purchased in part by IAC.He co-founded Openlist.com, a local search start up that was self-funded and sold to Marchex (Nasdaq: MCHX);He was a partner at PAR Capital, a multi-billion hedge. 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. 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. Our best guess is that maintenance capex for Meta is less than $10B annually. Days Trial. 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. This is a business it's trading at 12 times free cash flow, X the meta investment and 18 times including. Despite public skepticism at times warranted we have been supporters When you were with me in December, you said that you had picked some more of that up along with Snowflake. What is the connection between those three companies. 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. This will alert our moderators to take action. WAPNER: Speaking of going higher up, you see what interest rates are doing today after sitting in a tight spot, they've started to move to 11. You do, you do great work, excited for the new show and let's stay after it. The letter is the latest sign that Meta investors are starting to express reservations about the company's recent performance. ", Twitter. At the end of the second. When you look at these questions, it comes down to this. In fact, we believe that augmented and artificial intelligence has the potential to drive more economic productivity than the internet itself. Includes DocuBay and TimesPrime Membership. It can do that by making. 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. 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. 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 Moreover, I am a strong supporter of founder-led companies especially when they have your successful track record of seeing the future. Contact. This lack of focus and fitness is obscured when growth is easy but deadly when growth slows and technology changes. Altimeter Capital Management LP. But the fact of the matter is the entire market has evaporated around these types of stocks. We agree to pay a one-time fee of $500 to ISDA at or before the submission of this Adherence Letter. "Jitesh Ubrani: Tweet From March 3, 2023. Altimeter Capital Management, LP Buys Opendoor Technologies Inc, Toast Inc, Duolingo Inc, Sells . We know Meta has more reach, more relevance, and more incredible opportunities for growth than almost any platform on the planet. You would simply do R&D quietly and investors would focus on the core business and the breakthroughs in AI. Altimeter Capital owns approximately 0.11% of Meta. What is the rate of increase? Altimeter Capital is an American investment firm based in Boston, Massachusetts and Menlo Park, California. 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. And so we add on a fair amount of exposures we entered this year. It just launched in 150 countries, has over a billion views. What is the metaverse and why are billions of dollars being spent on it? On top of that we had supply chain challenges. In our view given United's valuable and industry-leading strategic asset base this long-term underperformance directly results from an underqualified, ineffective, complacent, and entrenched Board. Email. The offers that appear in this table are from partnerships from which Investopedia receives compensation. JavaScript in your web browser. This would double annual FCF and put FCF as a percentage of revenue more in line with Google, Microsoft, and Apple. He said a 20% cut in employee spending would take Meta back to the levels of staffing it had last year and argued that the company can't spend as it used to since the cost of capital and interest rates have risen recently. So these are different order of magnitude bets. The answer to that is because people are very fearful. Altimeter Capital Management partner Chris Conforti plans to leave the investment firm, according to people with knowledge of the matter. Remember last year they gave a guide at the beginning of the year they're going to grow at 80%. browser. We're down on the year. This lack of focus and fitness is obscured when growth is easy but deadly when growth slows and technology changes. Meta. We can just go through the list, Uber, Facebook, Roblox. Brenda Yester Baty, Head of Strategic Initiatives at Lennar Corp.; former SVP Revenue Management at Carnival Cruise Lines. Over time, we intend to share with United's stockholders our detailed analysis, which has led us to conclude, among other things, that: 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. 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. 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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. And we are confident that your long-term investments in AI and the next generation of communications will continue to drive us all forward. 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. Can you tell me where that stands now and how you view stocks like that that have gotten absolutely obliterated? I think you're gonna see monetization gains against IDFA and either way we lap that issue in Q3 and Q4. In the back half, you've already lapped IDFA, in the back half of this year, the supply chain issues begin to ameliorate. We were about 30% to 40% depending upon which basket you looked at software internet above the five-year average. The industry leader for online information for tax, accounting and finance professionals. AGCUU went public at $10 on Oct. 1, and closed Tuesday at $11.80. ISDA fosters safe and efficient derivatives markets to facilitate effective risk management for all users of derivative products. I have been told that Amazon spent far less in total to build AWS. But you also (sometimes) capitalize the first word of a quote. 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. 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. 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. 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. Warren Buffett's: Berkshire Hathaway. The stock today hit a new low under $3. As a result, the team hastily pivoted the company toward the metaverse including a surprise re-naming of the company to Meta. And Meta certainly has abundant financial resources to invest and / or return to shareholders. 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. Altimeter Capital. 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. Our best guess is that maintenance capex for Meta is less than $10B annually. He argued that this was "one of the big reasons behind these price cuts.". Over the last three years, Meta has also dramatically increased its capital expenses. 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. 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. 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. ISDA is a registered trademark of the International Swaps and Derivatives Association, Inc. And so, for our LPs, the bet is simple. ISDA fosters safe and efficient derivatives markets to facilitate 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. Sign up for free newsletters and get more CNBC delivered to your inbox. 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. Worse, this skepticism seemed to be affirmed with a nearly-immediate and sizable miss in financial results and continued under-performance throughout 2022. To put that in perspective, excluding your large metaverse investment, Meta is investing more in capex than Apple, Tesla, Twitter, Snap, and Uber combined! 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. Sign Up. Meta and other large companies have made it very difficult for start-ups to hire. It did not specify which of Alitmeter's SPACs Grab was in talks with. Investopedia requires writers to use primary sources to support their work. Altimeter Capital Management is an investment firm that operates within the technology sector. Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. 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. 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? PLAN, Yearly The lagging stock price under this Board's control and supervision directly reflects substantial underperformance in terms of operational reliability, customer satisfaction, market share, profitability, and return on invested capital.
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