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Pure play refers to a company that focuses on a particular product or activity instead of various interests. Investing in a pure play can be considered as investing in a particular commodity or product of a company.
Pure play method
Pure play method is an approach to estimate the cost equity capital of private companies, which involves examining beta coefficient of other public and single focused companies.
The equity beta coefficient of a public company B is needed when estimating a private company A's equity beta coefficient. The equity beta coefficient of company B can be calculated by regressing return on its stock on the return on the relevant stock index. Then applying following calculation to get beta coefficient of company A.
Unlevered beta of B = (Equity) Beta Coefficient of B / (1 + DEB × (1 − Tax RateB))
(Equity) Beta A = Unlevered Beta of B × (1 + DEA × (1 − Tax RateA))
Where DEA and DEB are the debt to equity ratios of company A and B respectively.
Pure play foundries
Pure play foundries such as TSMC and Global foundries are foundries who do not have any in-house design capabilities but only fabricate the Integrated Circuits (ICs) for fabless semiconductor companies such as Qualcomn, Broadcom, Xilinx, Nvidia etc. Integrate Device Manufacturer (IDM) foundries such as IBM, NEC, TI and Samsung provides both foundry design services and ICs fabrication.
Pure play E-retailers
Compared to traditional clicks-and-mortar, pure play e-retailers can serve a wider audiences without physical boundaries and distance. Besides, pure play e-retailers target at specific customer groups without high cost of obtaining information of these groups.
Compared to clicks-and-bricks, pure online internet retails do not have brand recognition and reputation at the start-up stage so it lacks customer bases. In addition, pure plays' customers are unable to touch, examine and test real products before buying them. Furthermore, online shopping experience lacks human contact with consumers which is considered as an effective way to respond questions, provide professional advice and motivate purchases.
Pure play gets physical
Amazon: Amazon customers in mainland UK with pickup code can get the order at collection lockers which are distributed in shopping centers and commercial blocks. Amazon has opened its first physical stores Purdue University campus in Indiana.
Simply be: Simply be has sixteen physical stores at present.
Net-a-porter: Launch a pop up window shop and apply image recognition technology to enable customers to find video content of the clothes and the online shop.
Kiddicare: A childcare brand, plans to open 12 stores in UK.
Ocado: Ocado has launched virtual shopping wall at One New Change, Birmingham's Bullring shopping center and Bristol. Customers can shop by using Ocado's “on the go” app to scan product's barcode on the wall.
eBay: eBay opened an inspiration shop in New York in 2011.
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