The Rise And Fall Of FaZe Clan's Stock: Esports' Most Influential In Penny Stock Territory

Zinger Key Points
  • The value of FaZe Clan has significantly declined since its initial public offering last year.
  • FaZe Clan is now a penny stock.

FaZe Holdings Inc FAZE, the professional esports and entertainment organization with headquarters in Los Angeles, California, USA, has seen its worth drop significantly since going public last year.

The organization was founded in 2010 as a gaming clan for Activision ATVI’s "Call of Duty," and has since expanded into a lifestyle brand, representing some of the biggest names in gaming, music, sports, and entertainment, such as Coca-Cola COKE, Microsoft MSFT, Sony SONY's Play Station, and McDonald's MCD.

See also: From YouTube To Nasdaq: How FaZe Clan Transformed An eSports Channel Into A Multi-Million-Dollar Business Backed By Pitbull, Offset And Others

However, despite claiming to be worth $700 million when it went public on July 20, 2022, by way of a special purpose acquisition company (SPAC), FaZe is now in penny stock territory, trading as low as $0.97 per share on February 6.

But, what happened? Factors such as controversy surrounding some members and a possible burst in the esports bubble may be contributing to the lack of investment in the company.

According to Kotaku, the stock price of FaZe Clan's FaZe Holdings fell below $1 for the first time ever on January 20 and continued to decrease throughout the following days. If this trend continues for over a month, the company risks getting delisted from the Nasdaq.

Where Is FaZe Clan Going?

On this subject, Lee Trink, FaZe’s CEO, told Forbes: “As we described in our Q3 announcement, FaZe is seeing strong business momentum with brands, talent and the gaming community following our entry to the public markets, and our revenue performance and full-year expectations reflect that.”

See also: Could The Hype Around eSports Be Fading? Find Out Why Some Experts Think So

Trink continued: “Given the broader economy as well as lower-than-expected proceeds from the go-public transaction, we are moving aggressively to manage our capital while looking at ways to enhance our balance sheet to pursue the growth opportunities in front of us.”

Furthermore, as of September 30th, 2022, FaZe reported a cash balance of $43.9 million, which is sufficient to support its ongoing operations only until November 2023.

The company expressed concerns in its quarterly regulatory filing, stating, "The current circumstances have created significant doubts about our ability to continue as a going concern, which depends on our capacity to generate substantial revenue and secure additional funds through debt and equity financing."

It's worth noting that the organization has players from around the world, across multiple games, including Valve's "Counter-Strike: Global Offensive," Krafton's "PlayerUnknown's Battlegrounds," Ubisoft UBSFF's "Tom Clancy's Rainbow Six Siege," Xbox's "Halo Infinite," Tencent TCEHY's "Valorant," and "Fortnite Battle Royale," Psyonix's "Rocket League," and Nintendo NTDOY's "Super Smash Bros. Ultimate."

Continue reading: Sky-High Salaries Are Plaguing Esports - Is A Recession The Cure?

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