Pure-play
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.
The term is ambiguous, but generally refers to firms that either specialize in a specific niche, or have little to no vertical integration. For example, a coffee shop may call itself a "pure play" restaurant, and a factory that only produces goods (not design or sell to consumers) may refer to itself as a pure play manufactory.
E-commerce companies are often referred to as pure play retailers, as they sell only through the Internet.
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 such as TSMC and GlobalFoundries are foundries who do not have any in-house design capabilities but only fabricate the Integrated Circuits (ICs) for fabless semiconductor companies such as Qualcomm, Broadcom, Xilinx, Nvidia and others. Integrate Device Manufacturer (IDM) foundries such as IBM, NEC, Texas Instruments and Samsung provides both foundry design services and ICs fabrication.
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.
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