Investor Pushes Snap to Raise Capital for New Specs Business Mengqi Sun Hedge fund Blue Duck Capital Partners wants Snap Inc. to raise capital by selling a stake in its nascent Specs unit, putting additional investor pressure on the social media app to deliver on its big investment in augmented reality glasses. Snap is “profoundly” undervalued and raising money for Specs would unlock significant shareholder value, Blue Duck Chief Investment Officer Alex Beinfield said in a letter to Snap’s board on Tuesday. The company’s shares were up about 1% at 10:02 a.m. on Tuesday morning in New York, giving it a market value of roughly $9.5 billion.
While the technology unveiled last month is “remarkable” and has enormous potential, Specs are unlikely to see mass adoption in the next year or two, Beinfield said in the letter. A Specs-focused capital raise would help spending without diluting Snap’s share count and preserve its cash flow, Beinfield said. It could also enable the company to potentially lower Specs’ price of around $2,200, he said.
Selling 20% of the Specs subsidiary at a valuation of $5 billion would raise $1 billion, which would fund the division’s spending for roughly two years, Beinfield argues. He said it should raise capital from venture capital or a strategic player such as Space X.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing