Meta has also been feeling pressure to improve the finances of its Reality Labs, the company's metaverseunit, which includes the VR headsets. 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. . Altimeter.com is Altimeter's only website. March 8, 2016 "New Prices for Meta Quest 2s 256GB SKU + Meta Quest Pro. I think we spent about an hour together. Your P/E ratio has fallen from 23x to 12x and now trades at less than half the average P/E of your peers. Finally, Prudential PLC lifted its . About Kevin Wang. Digital Markets Act (DMA): How the EU Law Will Work, Mark Zuckerberg: Founder and CEO of Meta (formerly Facebook), Crowdfunding: What It Is, How It Works, Popular Websites, FTX: An Overview of the Exchange and Its Collapse, New Prices for Meta Quest 2s 256GB SKU + Meta Quest Pro, Time to Get Fit an Open Letter from Altimeter to Mark Zuckerberg (and the Meta Board of Directors), Meta Reports Fourth Quarter and Full Year 2022 Results. And we've had government intervention of the magnitude. Altimeter Capital owns about 2.46 million Meta shares. ", Twitter. 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. The facts are startling. We believe in this team. Today, the cost of capital has radically changed, and so has Metas growth rate. 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. Altimeter. But admittedly, you know, nights like tonight we'll we'll get we'll catch a little less sleep. We believe the future lies in AI. I remember people asking that question about Amazon. Right. The Wall Street Journal reported on Thursday that Grab was in talks with Altimeter. CAPEX Investing Aggressively and Responsibly in the Future of AI. International Swaps and Derivatives Association. And so we add on a fair amount of exposures we entered this year. At Meta, the number of employees is up over 3x from 25k to 85k employees in just the last four years! The silver lining is that unlike many companies, this popular narrative obscures the truth. In addition, people are confused by what the metaverse even means. 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. 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. Ranked #76 out of 483 Hedge Fund Managers. Whatever the reason, that is certainly the perception. SPACs notched more than $70 billion so far in 2021, a new record. Superficial change in panicked response to rigorous scrutiny is hardly noble or a basis for stockholders to have confidence in your judgment. . 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. Board of Directors c/o Chairman Henry L. Meyer III United Continental Holdings, Inc. . We simply wanted to further engage and continue sharing our thoughts as an interested shareholder. With all of this said, we truly believe that the company should be making some of these important investments. Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. Portfolio Gain +273.45%. So I think they got to match the investment to the revenue growth of the business. Getting Fit Headcount Reduction / Expense Control. 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 . 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. JavaScript in your web browser. Paul A. Reeder Founder & Chief Executive Officer at Altimeter Capital . 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%. As you know we entered the year with a big bond short, we've now covered that bond short because we don't think that it's possible for the Fed to raise rates 7,10, 12 times as some people think this year. 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. This would double annual FCF and put FCF as a percentage of revenue more in line with Google, Microsoft, and Apple. Adani Group on Thursday said US-based boutique investment firm GQG Partners has picked up equity stakes worth $1.87 billion (15,446 crore) in four listed group companies Adani Ports and Special Economic Zone, Adani Green Energy, Adani Transmission and flagship Adani Enterprises via secondary share sales. We do not take job reductions lightly. Rodney O'Neal, former CEO of Delphi Automotive; former board member of Delphi Automotive, Sprint, and Goodyear; Are you as optimistic today as you were in months past? Contact. With that said, we have a shortage of talent in Silicon Valley. will trigger a new window or tab to open. 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. With SNOW currently trading at $242, that stake is now worth $8.8 billion. 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. In the last 18 months, Meta stock is down 55% (compared to an average of 19% for its big-tech peers). 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. Panel led by former SC judge to include NaBFID chair KV Kamath and Infys Nandan Nilekani. In short, Meta needs to get fit and focused. Altimeter Capital Management, LLC a Portfolio Activity as reported in the most recent 13F form published on Dec 31, 2022. Our six nominees have the necessary skills, leadership abilities, and relevant experience to catalyze a United course change and to help the Company realize its immense potential. Subject: Meaningful Board Change Required Over time, we intend to share with United's stockholders our detailed analysis, which has led us to conclude, among other things, that: When you visit the site, Dotdash Meredith and its partners may store or retrieve information on your browser, mostly in the form of cookies. 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. 16,839 Followers. Comprender el funcionamiento social, poltico, econmico, cultural y natural de la sociedad a fin de reflexionar, hacer propuestas y asumir compromiso en torno a las polticas de desarrollo nacional, local y regional en el mbito del respeto de los derechos humanos, la integracin econmica y la convivencia social, bajo una concepcin de desarrollo humano sostenible. 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. I think the only debate is what is the multiple going to be in three months, in six months, in nine months. Further strengthening our own conclusions, your seemingly desperate actions yesterday appear as a transparent and cynical attempt to maintain your official privileges and power, despite your long historical record of deficient oversight on behalf of stockholders. We do not take job reductions lightly. At the end of the second quarter this year, Altimeter Capital held more than 2 million shares of Meta. We are generally patient investors. ISDA fosters safe and efficient derivatives markets to facilitate "Time to Get Fit an Open Letter from Altimeter to Mark Zuckerberg (and the Meta Board of Directors).". But you also (sometimes) capitalize the first word of a quote. In short, Meta needs to get fit and focused. b***@altimeter.com. Its competitor or not its competitor, its closest comp in Southeast Asia Sea Limited is also down over 70%. 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. browser. Meta changed its company name from Facebook. 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. He defied expectations and made profits on Priceline, Expedia, Uber, Twilio, and Hubspot. When you were with me in December, you said that you had picked some more of that up along with Snowflake. And I appreciate you being with me on the very first "Overtime" show. Ro $500.0M. Facebook's revenues in Q1 were lower than people expected. 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. articles a month for anyone to read, even non-subscribers! This would double annual FCF and put FCF as a percentage of revenue more in line with Google, Microsoft, and Apple. 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: Getting Fit Headcount Reduction / Expense Control. What is the connection between those three companies. 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. 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 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. So, its with some hesitation, but significant conviction, I am sharing an open letter strongly encouraging Meta to streamline and focus its path forward. 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. All Rights Reserved. That could in fact become a tailwind as we get to the back half of the year. WAPNER: Man, I love how honest you are and I know our viewers do as well. We had given most of that up by middle of December. So take Snowflake as an example. It can do that by making. 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%. 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. 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. So first, you need to understand why did we see a deceleration of revenue because that informs why we're going to see a reacceleration in the back half of this year. We have no stimulus checks. 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. Altimeter LLC. I don't think there's any chance that the Fed is going to raise rates 10 times this year. Benzinga does not provide investment advice. 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. Chief Executive Officer 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? We'll see you soon. With all of this said, we truly believe that the company should be making some of these important investments. Whatever the reason, that is certainly the perception. Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. You know how to time markets. Meta reported in February that Reality Labs lost $13.72 billion in 2022. As a result, the team hastily pivoted the company toward the metaverse including a surprise re-naming of the company to Meta. ", 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%. 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. The letter is the latest sign that Meta investors are starting to express reservations about the company's recent performance. We also reference original research from other reputable publishers where appropriate. 2499 1749, Monthly As you know, we have attempted to work collaboratively with the current Board to meaningfully improve governance, Board composition, and oversight. 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. 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. Board of Directors It massively distorted multiples on the way in and it's massively distorting multiples on the way out. Why 20%? Altimeter Capital is in talks with ride-hailing company Grab to bring the company public in a $40 billion deal, according to a report from The Wall Street Journal. 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. Includes DocuBay and TimesPrime Membership. A securities lawyer, Brad Gerstner graduated from HBS in 2000 and joined General Catalyst. He also asked Zuckerberg to cut down on capex and employee expenses. I think they have to take a look at their capital allocation plan. 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 . In a single quarter, they added 1.4 billion. What is the metaverse and why are billions of dollars being spent on it? See the Top Performing Hedge-Funds > Brad Gerstner . PLAN, Yearly c/o Chairman Henry L. Meyer III And frankly, I don't think we're gonna have hyperinflation in a world where demand is being destroyed at the rate it's currently being destroyed. In the last 18 months, Meta stock is down 55% (compared to an average of 19% for its big-tech peers). CAPEX Investing Aggressively and Responsibly in the Future of AI. What's going to be the inflation print in April? But as you know, in the first three months of this year, all the high-quality stocks are being destroyed as well. 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. 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. Can it possibly be worth 200 billion? Sign up for free newsletters and get more CNBC delivered to your inbox. 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?