Investor urges Snap to raise outside capital for Specs

Blue Duck Capital Partners has written to Snap’s board urging it to sell about a fifth of its Specs subsidiary at a $5B valuation, raising $1B to fund roughly two years of spending without diluting Snap shareholders. It is the second fund to press Snap over Specs, and the glasses ship this autumn into three markets, one of which is France.

A hedge fund wants Snap to sell a fifth of its augmented reality glasses business to outside investors at a $5B valuation. Specs go on sale this autumn in the United States, Britain and France. France’s data protection regulator has already told Meta that a recording light is not consent.

Blue Duck Capital Partners wrote to the board on Tuesday saying Snap is “ profoundly ” undervalued, as Bloomberg reported . Selling 20% of Specs at $5B would raise $1B and cover about two years of the division’s spending. Chief investment officer Alex Beinfield suggested venture investors or a strategic partner such as SpaceX.

Doing nothing, he wrote, means “ a deeply depressed share value, which limits strategic optionality “.

Blue Duck holds Snap shares and call options, has not said how many, and reserves the right to sell immediately after publishing.

It is the second fund pushing at the same product, from the opposite direction. Irenic Capital Management built a position earlier this year and has argued Snap should spin off or shut Specs, saying more than $3.5B has gone into it and it should be self-funding by now.

Neither can compel anything, because Snap listed in 2017 with a structure that leaves public shareholders no votes.

We reported in June that Specs would cost $2,195 and ship this autumn in three countries. Snap had already made Specs a separate subsidiary in January, and cut about 1,000 jobs in April. Beinfield says a capital raise could bring the price down.

France’s CNIL said in June that notification devices have only a limited range and are insufficient, and that wearers need the consent of the people they film. Meta’s glasses now stop recording when covered . Paris prosecutors have opened a criminal investigation into smart glasses used to film women without consent.

Hans Anders pulled Meta’s Ray-Bans from its Dutch and Belgian shops on Monday, Wehkamp paused sales, the Dutch data protection authority is weighing further measures and Norway plans a temporary ban in some public spaces.

It puts $5B on a product nobody has bought yet, in a category where British venues are refusing a rival’s version and the European Data Protection Board is writing a report, and asks somebody to buy a fifth of it.