Everything about FaZe, Astralis, and Heroic’s financial problems

Many people may wonder why esports organizations such as FaZe, Astralis, and Heroic are experiencing economic problems lately.

The current state of the world’s finances is not very favorable; we have seen an increase in inflation, and the prices of shares in different stock exchanges have decreased.

Consequently, the esports industry has been affected by the global financial crisis; thousands of companies have had waves of layoffs and staff cuts. Undoubtedly, this crisis affects large and small organizations; a sample of this has been seen with FaZe, Astralis, and Heroic, some of the most affected teams.

Financial problems

FaZe Clan

FaZe Clan has not been in the best financial situation for some time now. So the esports organization partnered with SPAC, and thanks to that, they could start trading on the NASDAQ stock exchange in the summer of 2022.

When the partnership between SPAC and FaZe Clan was unveiled, it was initially estimated that the transaction would be worth $1 billion. However, when the deal was formalized, the transaction was valued at $750 million. But we must say that both figures were wrong.

This overvaluation of the partnership pointed to disaster, which is exactly what happened to FaZe Clan. At the time of the organization’s IPO, its shares experienced a small rise in price, reaching a peak price of $20.08. But this did not last for long, as the share price began to plummet, and in the past month, each FaZe Clan share was worth $0.40.

FaZe Clan’s most serious problems began in September last year; when it came to light that 92% of SPAC shareholders had sold their shares after the organization’s IPO.

FaZe Clan’s share price has been below $1 for several months, and NASDAQ was forced to issue a notice to the organization for non-compliance with listing requirements.

From the moment FaZe Clan receives the notice, it has 180 days to comply with the requirements, and if it does not comply within that period, it will be delisted.

On the other hand, according to information provided by Sports Business Journal, FaZe Clan is currently working to become a private company again.

Astralis

On the other hand, we have Astralis, another publicly traded organization; however, it apparently follows FaZe Clan’s example and studies the possibility of delisting from the stock exchange.

The organization is currently evaluating its financial strategy. One of the strategies that the organization has in mind is to merge with another company and sell part of the shares to it; in this way, it will be able to raise money quickly. On the other hand, there is the option of issuing new shares; although it is unlikely, it is an option.

Heroic

Another organization that is not in the best financial situation is Heroic. The organization took the step of generating new shares to raise money to continue operating. Heroic has enough money to keep the organization’s doors open until this summer. To cover expenses for the next two years, it must raise $7.5 million to stay operational.

All three organizations are in financial trouble due to a lack of profitable sponsorships, mounting debt, and failed IPOs.

Header: Anna Nekrashevich | Twitter