Limit investment in metaverse / Reality Labs to no more than $5B per year. 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. 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. We want to hear from you. 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. BRAD GERSTNER: Hey, Scott, thanks for having me. 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. effective risk management for all users of derivative products. Protocol: Capitalizing on the fund's VC success, Gerstner raised $450M for Altimeter Growth Corp (AGCUU), a blank check company IPO targeting the tech sector. I have deep respect and admiration for founders that continue to grind, inspire, and invent long after the financial motivation is gone. In fact, we distributed over $6 billion worth of Snowflake to our venture investors last year. Bruce Berkowitz's: Fairholme Capital Management. How big is that market? An estimated $100B+ investment in an unknown future is super-sized and terrifying, even by Silicon Valley standards. Whatever the reason, that is certainly the perception. We simply wanted to further engage and continue sharing our thoughts as an interested shareholder. I have been told that Amazon spent far less in total to build AWS. To read full story, subscribe to ET Prime, Billed annually at Today, the cost of capital has radically changed, and so has Metas growth rate. Altimeter Feb 2021 - Present2 years 2 months New York, United States Chris is a Partner at Altimeter on the private investing team where he focuses on investing in iconic late stage technology. 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. 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. Activist investor Brad Gerstner, founder and CEO of tech-focusedhedge fundAltimeter Capital, sent anopen letterto CEOMark Zuckerbergin October calling for a pullback in metaverse spending. 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. Activist investor Brad Gerstner, founder and CEO of tech-focused hedge fund Altimeter Capital, sent an open letter to CEO Mark Zuckerberg in October calling for a pullback in metaverse spending. 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. 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 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. Trading Book: Climate Risk Scenario Analysis Close Cart 0; Reveal page search bar; ISDA fosters safe and efficient derivatives markets to facilitate effective risk management for all users of derivative products. Headquarters Location One International Place Suite 2400 Boston, Massachusetts, 02110, United States 617-310-6180 Suggest an edit 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. Altimeter manages a long / short public equity fund and private growth equity funds. 2-Year Those decisions include slashing expenditure and reducing headcount, the CEO of Altimeter Capital told Meta founder Mark Zuckerberg in an open letter. You would simply do R&D quietly and investors would focus on the core business and the breakthroughs in AI. 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. WAPNER: Let me lastly ask you about Grab, the SPAC deal you did, biggest SPAC deal ever of $40 billion. The last 10 years have been a unique time in tech and for Meta. CAPEX Investing Aggressively and Responsibly in the Future of AI. The answer to that is because people are very fearful. Investors in the round: 776 Capital, Altimeter Capital, BoxGroup, Dragoneer Investment Group, FirstMark, General Catalyst, Radcliff Group, ShawSpring Partners, SignalFire, The Baupost Group, Torch Capital, TQ Ventures Altimeter Capital launched its two SPACs in October and January, raising a combined $850 million between the two blank-check vehicles. All rights reserved. In addition, people are confused by what the metaverse even means. 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? In the last 18 months, Meta stock is down 55% (compared to an average of 19% for its big-tech peers). All Rights Reserved. 10. Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more! Altimeter Capital Management, ISDA 2021 SBS Top-Up Protocol - Adherence. 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. I expected that as the world of normalized post Omicron that we would get back to the five-year average multiple. 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. We can just go through the list, Uber, Facebook, Roblox. We've destroyed over $15 trillion of stock market wealth. 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. 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. 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. Conforti plans to join a new firm as a co-founder with. 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. And Meta certainly has abundant financial resources to invest and / or return to shareholders. Unlock your 30 days free access to ETPrime now. Revenue. It has 24 billion in free cash they're going to generate this year. Privacy Policy, ISDA uses cookies to enhance your experience on our website. Got a confidential news tip? All quotes delayed a minimum of 15 minutes. 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. In short, Meta needs to get fit and focused. It said Grab is expected to raise between. They were cratering ironically, now we're normalizing and growth stocks are down even more than they were at the start of COVID. Credit Derivatives Determinations Committees, how to enable Data is a real-time snapshot *Data is delayed at least 15 minutes. Frankly, if I was Sea Limited, if I was Uber, I might be looking at consolidating the business. We know they have high EBITDA margins on the rideshare business which is dominant across the region. All Rights Reserved. Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. By any normal company or start up standard, $5 B per year would seem like an extraordinary amount. 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. Mar 11, 2021 3:07 PM EST. At first glance, the rules of English capitalization seem simple. 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%. It's been a big drawdown this year. It makes no sense to me, but that is the risk that you run. Capital October 20, 2022 Risk & Capital. 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. Meta Platforms, which is set to report third-quarter results on Wednesday after markets close, declined to comment. Metas core business is one of the largest and most profitable in the world with over $45 B in operating profits last year alone. Subject: Meaningful Board Change Required 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. Social networking is the use of internet-based social media platforms to make connections and share various media with friends, family, colleagues, or customers. Paul A. Reeder Altimeter Capital Management LP. About Kevin Wang. Investopedia does not include all offers available in the marketplace. 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. Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts. This is a company that only did 1.2 billion in revenue last year. Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. The bet . 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. You got a lot of this right but multiples have come down a heck of a lot to this point. Altimeter Growth Corp. 2 raised $400 million in a January IPO. browser. So I think they got to match the investment to the revenue growth of the business. PLAN, Yearly I can't tell you what's going to happen the next three days or the next three weeks or even three months. 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. 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. [3] We understand that the Protocol is designed to amend only those Protocol Covered Agreements between two Adhering Parties that were previously amended pursuant to the terms of the August 2012 Protocol, the March 2013 Protocol or both. Over time, we intend to share with United's stockholders our detailed analysis, which has led us to conclude, among other things, that: What's going to be the inflation print in April? 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. And so, for our LPs, the bet is simple. In fact, we believe that augmented and artificial intelligence has the potential to drive more economic productivity than the internet itself. Right. Dear Chairman Meyer and Board Members: 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. 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. It's interesting that now today you say we're in the neighborhood of a tradable bottom. And so that will be rolled out in Q2 and Q3. 41,300 crore) to $25 billion (roughly Rs. It just launched in 150 countries, has over a billion views. At the end of the second quarter this year, Altimeter Capital held more than 2 million shares of Meta. Mark Zuckerberg is a self-made billionaire and the CEO of Meta (formerly Facebook), which he co-founded in his dorm room in 2004. Email. And what is going to be the resolution to the situation in the Ukraine? A newly launched P2E adventure game, Chronos: Dawn of Tie, has introduced a series of brand-new PvP elimination tournaments.Last month, the whimsical battle game organized its beta stage featuring selected players. Facebook parent Meta Platforms (META) announced that it would reduce selling prices for its Quest virtual reality (VR) headsets. What is the metaverse and why are billions of dollars being spent on it? Round: Series D Description: Ro is a telehealth startup that operates digital health clinics for men's and women's health, along with smoking cessation. 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. As such, we would encourage the company to move aggressively and cut at least 20% of employee-related expenses by January 1, 2023. Meta stock is down over 61% in 2022. 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. 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%. We were wrong. It's a better version of Messenger. According to Hedge Follow, it was authored by Brad Gerstner, CEO and founder of technology investment firm Altimeter Capital. What Does Metaverse Mean and How Does This Virtual World Work? Right? 2023 International Swaps and Derivatives Association, Inc. 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%. 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. Can they maintain their growth momentum? Whatever the reason, that is certainly the perception. ISDA fosters safe and efficient derivatives markets to facilitate Conclusion A Leaner, Faster, More Successful Meta. At $20-$25B of annual capex, Meta will still be investing market leading amounts to help invent the future of AI. What am I supposed to think about that? 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 mean, two years ago we were we were having this conversation. 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. Get this delivered to your inbox, and more info about our products and services. How many increases? JavaScript in your web browser. Meta and other large companies have made it very difficult for start-ups to hire. Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. 2,06,700 crore) a year and capped annual investment in the metaverse to $5 billion (roughly Rs . Board of Directors c/o Chairman Henry L. Meyer III United Continental Holdings, Inc. . We believe in this team. 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. Ro $500.0M. PLAN, Access the exclusive Economic Times stories, Editorial and Expert opinion, 90 Days Prime access worth Rs999 unlocked for you, Exclusive Economic Times Stories, Editorials & Expert opinion across 20+ sectors, Stock analysis. ISDA fosters safe and efficient derivatives markets to facilitate effective risk management for all users of derivative products. That's why even the sell side consensus numbers have their growth rate accelerating, almost doubling between Q2 and Q4 of this year and we think it will accelerate even faster. 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. If you look at the company, it's now trading at $5 billion enterprise value. Contact. Tina Sharkey, CEO of SherpaFoundry; former board member of HomeAway; and Panel led by former SC judge to include NaBFID chair KV Kamath and Infys Nandan Nilekani. We have $130 oil and $6 gas at the pump. They may never get back to the levels at which they traded before. Meta. Altimeter and PAR believe these experienced professionals can bring meaningful experience, objective oversight, and powerful change to United. UPDATE: Altimeter Capital, PAR Capital Issue Letter to United Continental Board - United Airlines Holdings (NASDAQ:UAL) - Benzinga SPY 397.68 0.74% QQQ 293.61 0.83% BTC/USD 22299.46 5.109%. The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs. "New Prices for Meta Quest 2s 256GB SKU + Meta Quest Pro. Copyright 2023 Bennett, Coleman & Co. Ltd. All rights reserved. It added that VR is "a powerful social platform and creative technology, and the more people with access to it, the better. ISDA is a registered trademark of the International Swaps and Derivatives Association, Inc. Experience Your Economic Times Newspaper, The Digital Way! David Einhorn's: Greenlight Capital. Altimeter Capital Management LLC. On Oct. 11, Meta announced a new high-end VR headset, the Quest Pro. 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 . I think, or inflation, I think they're behind the curve on recession. 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. 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. Altimeter Capital. 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. will trigger a new window or tab to open. But remember, Facebook's not just sitting there with his hands in the air saying oh my goodness, what can we do in a world where Apple wants to flex its monopolistic muscle and steal all of our advertisers.