What does Pure Play mean?

Pure play refers to a company that focuses on a single line of business or a single product. A classic example of a pure play company is Coca-Cola, as it plays only in beverages. On the other hand Pepsi is not considered a pure play company, as it also has interests in food business.

Pure play is an important concept and is used for determining the cost of capital of new businesses.  While entering into a new pure play line of business, other companies in the similar pure play business are analyzed to infer the cost of capital for the business.

Pure Play also has significance for internet parlance. Those companies that operate only over internet and do not have any physical presence are pure play internet businesses. An example is Facebook, or Netflix.

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