Snapchat parent Snap Inc. (NYSE:SNAP) is in discussions with potential investors, including Saudi Arabia’s Public Investment Fund, to raise at least a billion dollars to bolster the company’s AR glasses operations, according to a report by tech news website Sources.
The report, citing people familiar with the matter, said CEO Evan Spiegel has been holding talks with various parties to raise capital over the past couple of months. Spiegel is scheduled to speak onstage at the fund’s Future Investment Initiative in Riyadh next week.
The fundraising details haven’t been finalized, and talks with Saudi’s PIF are ongoing, the report said.
Snap plans to turn its Specs hardware unit into an independent subsidiary—similar to Waymo, which operates independently within Google’s parent company, Alphabet—while continuing to raise money from investors, the report said, citing sources.
In September, Saudi investor Prince Al Waleed bin Talal Al Saud boosted his stake in Snap by 0.5% to 2.8% by purchasing 15.2M shares. The prince currently holds 40.8M shares in the Santa Monica, California-based company, which, as per the last closing price of $7.87, is valued at over $321M.
Separately, Snap’s investment rating was downgraded by research firm Stifel to “sell” from “hold” on concerns the company will continue to lose market share, which will hurt ad revenue growth next year.
“Our checks continue to skew negative, and with incremental confidence TikTok is not going away in the U.S., we believe this trend is unlikely to reverse any time soon,” Stifel analyst Mark Kelley said. The price target was lowered to $6.50 from $8, implying a downside of more than 17%.