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Blue Duck presses Snap to fund its Specs via outside capital

The hedge fund argues Snap should raise external money for Specs to fund growth while limiting dilution, including a plan to sell a 20% stake at a $5 billion valuation.

Reported · Written up by our desk · Fund Industry

Hedge fund Blue Duck Capital Partners has urged Snap to raise outside capital for its augmented reality glasses business, Specs, in a bid to narrow the gap between the unit’s value and Snap’s market valuation, according to Hedgeweek.

Blue Duck Chief Investment Officer Alex Beinfield said Snap is “profoundly” undervalued and argued that separating funding for Specs could unlock value for shareholders without further diluting Snap’s equity.

In a letter to Snap’s board on Tuesday, Beinfield cautioned that the glasses are unlikely to see widespread adoption over the next one to two years, but said a dedicated capital raise would help keep Specs funded while limiting effects on the parent’s cash flow and share count.

Blue Duck also suggested additional funding could help Snap reduce the current Specs price of about $2,200, and estimated that selling a 20% stake in Specs at a $5 billion valuation could generate roughly $1 billion.

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