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 After all, why not hire more people and invest in more things when the cost of capital was near zero and growth seemed unlimited? 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. Altimeter Capital owns about 2.46 million Meta shares. Steven Cohen's: Point72 Asset Management. Link to 13F filings: SEC filings Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. 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. 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? And we are confident that your long-term investments in AI and the next generation of communications will continue to drive us all forward. committed hundreds of millions of dollars to Sequoia Capital, Altimeter Capital Management and Multicoin . click here! He defied expectations and made profits on Priceline, Expedia, Uber, Twilio, and Hubspot. Altimeter Capital's Brad Gerstner Issues Open Letter to Meta (NASDAQ: META) and Mark Zuckerberg. Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. Conclusion A Leaner, Faster, More Successful Meta. But listen, there's massive uncertainty in the world. 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. 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%. Consumer confidence is plummeting. As always, happy to connect with you and your team. And now we've shot right through the five-year average. It's going to do 20 billion in GMV. 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. Ray Dalio's: Bridgewater Associates. Tina Sharkey, CEO of SherpaFoundry; former board member of HomeAway; and The firm's private equity arm makes all-stage venture capital investments, primarily in the technology sector. WAPNER: I wanna, I want to take a break and get into some of those names of all four but before I do that lastly, you mentioned very interestingly that you've taken your bond short off. 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. But as you know, in the first three months of this year, all the high-quality stocks are being destroyed as well. Today, the cost of capital has radically changed, and so has Metas growth rate. To experience the full functionality of the ISDA website, it is necessary to enable Javascript in your United Continental Holdings, Inc. Please refer to the section on cookies in our Website Privacy Policy A Division of NBCUniversal. Global Business and Financial News, Stock Quotes, and Market Data and Analysis. Meta (Facebook) Begins Biggest Layoffs in Company's History, Meta (META) Connect Conference Key Takeaways, Meta (Facebook) Shares Slammed as Earnings, Spending Disappoint. 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. What is the rate of increase? A Division of NBCUniversal. It can do great this, the business can be incredible. WAPNER: Man, I love how honest you are and I know our viewers do as well. 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. But I am confident these companies like Snowflake, like Uber, like Facebook are going to be worth more than they are today at significantly more if you look out two years. Investopedia does not include all offers available in the marketplace. 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. Altimeter Capital Management, LP Buys Opendoor Technologies Inc, Toast Inc, Duolingo Inc, Sells . The comp against IDFA was very difficult in Q1 and will again be difficult in q2. In the last 18 months, Meta stock is down 55% (compared to an average of 19% for its big-tech peers). Our best guess is that maintenance capex for Meta is less than $10B annually. 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. Altimeter LLC. 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. If the company were investing $12B per year into this project, then that confusion might not even be a problem. No matter how a company came public in 2021, let alone December of 2021, right, they've been obliterated. 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. We're down on the year. Remember last year they gave a guide at the beginning of the year they're going to grow at 80%. This is a hard game. Meta Platforms (META) shares jumped 6% after the tech giantannouncedbig price cuts for its virtual reality (VR) headsets. Meta Platforms, which is set to report third-quarter results on Wednesday after markets close, declined to comment. What am I supposed to think about that? "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," Gerstner wrote. They are people with families and kids to support. Background [ edit] In 2008, Brad Gerstner founded Altimeter Capital in Boston, Massachusetts. 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. Rates are going up and we have a war. In fact, in the most recent quarter, they added 1.4 billion of contracted value. Right. Everybody knows we've been in this company for a long time. 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. See here for a complete list of exchanges and delays. The Singaporean rideshare giant Grab is set to merge with the SPAC Altimeter Growth 1, according to a report from The Financial Times. BRAD GERSTNER: Hey, Scott, thanks for having me. PAR Capital Management, Inc. Do Not Sell My Personal Data/Privacy Policy. These are not numbers on a spreadsheet. We also reference original research from other reputable publishers where appropriate. To put that in perspective, excluding your large metaverse investment, Meta is investing more in capex than Apple, Tesla, Twitter, Snap, and Uber combined! Brad Gerstner's Altimeter Capital Management has between $300 million and $400 million in assets under management, and invests almost exclusively in the services sector. Advertisement Gerstner, through Altimeter, manages over $15.0 billion worth of investments across private equity and venture capital. Musk Made a Mess at Twitter. You would simply do R&D quietly and investors would focus on the core business and the breakthroughs in AI. We have no stimulus checks. And what is going to be the resolution to the situation in the Ukraine? At first glance, the rules of English capitalization seem simple. 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. We do not take job reductions lightly. Altimeter Capital Management LLC. The Wall Street Journal reported on Thursday that Grab was in talks with Altimeter. So take Snowflake as an example. At the same time that Meta ramped up spend, you lost the confidence of investors. I don't think there's any chance that the Fed is going to raise rates 10 times this year. In the letter, Gerstner said Altimeter Capital doesn't have demands and simply wants to engage with Meta management. So these are different order of magnitude bets. Meta changed its company name from Facebook. There is no doubt that doubling annual FCF will improve share price. Altimeter is focused on technology investment, and has found multi-billion-dollar success. If Meta was able to control those costs, he said, then it could double its free cash flow and improve its share price. I think they have to take a look at their capital allocation plan. March 8, 2016 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. As a result, the team hastily pivoted the company toward the metaverse including a surprise re-naming of the company to Meta. Ram Parameswaran is the founder of Octahedron Capital, a global, growth-oriented investment firm that seeks to make concentrated investments in leading public and private companies that drive the world's internet economy. Southeast Asia's largest ride-hailing company, Grab Holdings, said Tuesday that it plans to merge with U.S.-based Altimeter Growth Capital in a deal that would value it at nearly $40 billion and . 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 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). You would simply do R&D quietly and investors would focus on the core business and the breakthroughs in AI. Social networking is the use of internet-based social media platforms to make connections and share various media with friends, family, colleagues, or customers. Brad, thank you. In fact, our internet stock index is at a 10-year low and software is back nearly where we were in 2016 before the rerating of software occurred. In the back half, you don't have those same comp issues that you have caused by COVID. At the start of COVID on March 26th when I felt about like I do today, growth stocks were under assault. We didn't think that was durable. I don't think Mark did a particularly good job of explaining the meta investments. It can do that by making. As you know, Altimeter Capital Management and PAR Capital Management are long-term United Continental Holdings, Inc. ("United") stockholders that together own approximately 7.1% of United's outstanding common stock. Altimeter and PAR believe these experienced professionals can bring meaningful experience, objective oversight, and powerful change to United. We'll see you soon. An estimated $100B+ investment in an unknown future is super-sized and terrifying, even by Silicon Valley standards. Today, the cost of capital has radically changed, and so has Metas growth rate. 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 launched its two SPACs in October and January, raising a combined $850 million between the two blank-check vehicles. So I think they got to match the investment to the revenue growth of the business. 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. 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. 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 . 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. Hedge Fund Manager. Founder & Chief Executive Officer at Altimeter Capital . We believe in this team. 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. But you also (sometimes) capitalize the first word of a quote. The full text of the stockholder letter to the United Board follows: March 8, 2016. GERSTNER: Scott, I love that you asked the question. So listen, I'm not happy about it. This will alert our moderators to take action. Your Reason has been Reported to the admin. The technology-focused hedge fund with a 0.1% ownership claimed that the company had lost investor confidence as it increased . ET on GuruFocus.com Builders Union LLP Buys AppLovin Corp, Match. As always, happy to connect with you and your team. Gordon Bethune, former CEO of Continental Airlines; board member of Honeywell, Prudential Financial, and Sprint; Meta and other large companies have made it very difficult for start-ups to hire. All Rights Reserved. The bottom line is where I wanted to start this whole interview with is you called it. Following is a link to video on CNBC.com: 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. Altimeter said such huge investments "in an unknown future is super-sized and terrifying, even by Silicon Valley standards". WAPNER: Okay, that's a that's a big a bold call. 2023 International Swaps and Derivatives Association, Inc. 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. Altimeter said annual free cash flow can be doubled to $40 billion (roughly Rs. 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. 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