Hedge fund Blue Duck Capital Partners is urging Snap Inc. to raise capital by selling a stake in its new Specs unit, which focuses on augmented reality glasses. In a letter to Snap’s board, Chief Investment Officer Alex Beinfield argued that Snap is “profoundly” undervalued and that raising money for Specs could unlock significant shareholder value.
Beinfield noted that while the technology is promising, mass adoption may not occur in the near future. He proposed that selling a 20% stake of Specs at a valuation of $5 billion could generate $1 billion, funding the division for about two years and potentially allowing a reduction in the Specs’ price of around $2,200.
The letter emphasized the risks of inaction, predicting stagnant share value and diminished employee morale. Blue Duck, while an investor in Snap, did not disclose its position size. Other investors, like Irenic Capital Management, are pushing for Snap to either spin off or close Specs after significant investment into the division.
Snap co-founder Evan Spiegel last month introduced Specs, with goals of enhancing learning, creativity, and work. The Specs unit was established as a standalone subsidiary in January.
