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FaZe Clan lost $53M in fall 2022

The FaZe Clan esports organization, during the last quarter of 2022, earned a total revenue of $70 million; however,... Maria | 31. March 2023

The FaZe Clan esports organization, during the last quarter of 2022, earned a total revenue of $70 million; however, in the financial report of its first year listed on the stock exchange, it is shown that the organization has made a loss of more than $53 million.

However, the organization’s net loss and much more than its financial report shows. In reality, FaZe Clan’s net loss is $168.5 million.

Many may wonder why FaZe Clan went from a loss of $53 million to a loss of $168.5 million due to a charge imposed on the organization for the IPO.

FaZe Clan has losses of more than $ 53 million

FaZe Clan has increased gross revenues by 32%, translating into $70 million. This revenue growth is primarily due to sponsorship deals and growth in its operations within esports.

FaZe Clan’s operations within esports have improved thanks significantly to the following:

However, revenue from consumer products has declined significantly. FaZe Clan executives comment that this area of the organization is not being given the strategic attention it should be.

Losses of more than $53 million

As discussed above, despite FaZe Clan’s high profits, the losses are much higher and exceed $53 million; however, if the extinguishment debt on the stock exchange is added, that amount rises to $168.5 million.

FaZe Clan’s loss report notes several growing expenses, such as:

  • Professional services fees result from expanding the organization and becoming a public company.
  • Stock compensation expenses.
  • Staff augmentation (Compensation and benefits).

FaZe Clan’s measures to minimize losses

Recently, there was a wave of layoffs due to its huge orders. The company’s layoffs were made to reduce the company’s operating expenses by 17%.

However, the organization’s losses continued to increase, from $13.6 million to $19.1 million.

Nevertheless, the organization is optimistic and claims that the organization has $37.8 million to cover operating expenses and make the investments planned for this year.

FaZe Clan’s stock market problems

At the moment, FaZe Clan’s stock market performance is not looking good; the value of its shares went from a high of $ 20 to a low of $ 0.40.

Due to the stock drop, Nasdaq notified FaZe Clan that they were not meeting the minimum requirements to be listed on the exchange. As a result, the organization has 180 days to comply with the requirements, failing which FaZe Clan could be delisted.

Despite the serious financial problems FaZe Clan is facing, the organization’s CEO, Lee Trink, encourages all shareholders.

Trink states that they are excited about the future of FaZe; the entire organization still believes in the esports team; they also have great content producers and a fan base that has always supported them. With the sum of these factors, the organization can move forward.

Header: FaZe Clan