A Snap SHAREHOLDER went public on Tuesday with a plan for the company’s augmented reality glasses: SELL a fifth of SPECS to outside investors at a $5 BILLION VALUATION and let the unit FUND itself. The open letter from Blue Duck Capital, a Manhattan Beach, California, HEDGE FUND, lands roughly two weeks before SPECS go on sale, according to TNW. Its headline number is CLEAR. The math underneath it depends on a product Snap has NOT ANNOUNCED.
What Blue Duck Is Asking For
In the letter, addressed to Evan Spiegel, Bobby Murphy and the full board, chief investment officer Alex Beinfield proposes that Snap RAISE DEDICATED SPECS capital after the commercial launch this fall, from either a VENTURE syndicate or a STRATEGIC partner. The one example he names is SpaceX, citing possible AI ties through xAI and a Starlink link.
The structure is simple. Selling 20 PERCENT of SPECS for $1 BILLION implies a $5 billion post-money value, leaving Snap holders with 80 percent, worth $4 billion on paper. Blue Duck ESTIMATES that SPECS BURNS about $500 MILLION a year, so the RAISE would cover roughly TWO years of spending without issuing new Snap shares. The FUND argues that once Wall Street sees a market price for SPECS, it will value the core advertising business separately, and it puts the resulting share price at $12 to $14, more than DOUBLE where the stock trades.
The Revenue Case Rests on a Cheaper SPECS
The letter defends the $5 billion mark two ways. The first is PRECEDENT: Magic Leap raised $793.5 million at a $4.5 billion VALUATION in 2016 before shipping anything, and Snap itself paid more than $500 million for waveguide supplier WaveOptics in 2021 to get ONE piece of the optical stack now inside SPECS.
The second is a REVENUE scenario, and it carries TWO CONDITIONS. If $1 billion in new capital can push the average price from about $2,200 to $1,000, and if just 1 percent of Snapchat’s roughly half-billion daily users buy one, SPECS would generate about $5 billion a year in HARDWARE SALES. On that basis, Blue Duck says, $5 billion is “just 1x plausible revenues.” A footnote spells out the implied volume: about 5 MILLION UNITS.
Neither condition exists TODAY. Snap has ANNOUNCED no $1,000 model, and the letter itself concedes that the current price, form factor and early app base are “unlikely to produce a mass market adoption phase over the next 1-2 years, at least.” Snap has also not disclosed PRESALE numbers; a Forbes report on Monday said a company spokesperson DECLINED to comment on early orders. In other words, the $5 billion figure is a VALUATION for a FUTURE SPECS, applied to a product NOBODY has bought yet.
What the Letter Discloses, and What It Doesn’t
Blue Duck says its funds hold a LONG position in Snap through Class A shares and CALL options, and that it may SELL or HEDGE “at any time, including immediately after publication, without notice.” It does NOT DISCLOSE the size of that stake. It also says it relied only on public information, has received no nonpublic information from Snap, and that naming third parties such as SpaceX does not imply any discussions with them.
The FUND also cannot FORCE anything. As TNW noted, Snap went public in 2017 with a share structure that gives public holders NO votes. TNW also reported that Blue Duck is the SECOND FUND to press Snap on SPECS this year, from the opposite side: Irenic Capital Management has argued that Snap should SPIN off or SHUT the unit, saying more than $3.5 billion has gone into it. Snap made SPECS a separate SUBSIDIARY in January, according to TNW. Snap had no immediate response to the letter, according to Bloomberg, which first reported it.
Why It Matters
The letter is less a verdict on SPECS than a sign of how LITTLE PATIENCE public markets have for AR HARDWARE. Blue Duck notes that Snap stock is down 93 PERCENT over five years, and by its own table, today’s ENTERPRISE value of about $10.3 billion works out to roughly $5.00 to $5.60 per share. Both funds now agree that SPECS should STOP drawing on Snap’s cash flow; they DISAGREE only on whether outside money or a SHUTDOWN is the answer. For anyone watching the category, the real test arrives this fall, when SPECS ship in the U.S., the U.K. and France and Snap finally has SALES figures to report, or to withhold.
Sources: Blue Duck Capital press release (Oct. 6, 2026); Blue Duck letter to Snap’s board (PDF); TNW; Forbes.