FaZe goes public and drops 30% in value during first day

After a massive $725 million special purpose acquisition company (SPAC) merger with B Riley Principal 150 Merger Corp, the... Shubh | 21. July 2022

After a massive $725 million special purpose acquisition company (SPAC) merger with B Riley Principal 150 Merger Corp, the popular esports organization FaZe Clan went public on Wednesday, July 20. On the first day on NASDAQ, the company took a significant hit and its share price dropped by 30%.

As a result of its success in the esports industry, FaZe went public with a price of $13.02 per share on the Nasdaq stock exchange. The stock price, which is trading under the symbol FAZE, suffered a severe 30% decline shortly after going public and fell to $9:30.

FaZe Clan is the first esports organization to go public but it’s not the first company to take a big hit on the stock market. In light of the weak IPO market, numerous corporations have cancelled their IPOs. Stock Analysis and FactSet reported that almost 70 companies have cancelled their IPOs since March, while the IPOs for 2022 are expected to take a massive hit of over 83% year-over-year. As reported by CNBC, firms going public through SPACs lost half of their value in 2022, but FaZe CEO Lee Trink believes that the company made the right decision by going public with SPACs. 

The process of FaZe going public took longer than anticipated, which could be another factor behind FaZe’s fall in the stock market. FaZe’s financial forecast caused delays, which prevented the merger from being completed in Q1 2022 as planned. The FaZe merger was, nevertheless, ultimately approved by the Securities and Exchange Commission in late June.

Can FaZe recover?

The organization currently fields 12 teams across various esports titles including CS: GO, Fortnite, Valorant, PUBG Mobile, PUBG,  Super Smash Bro Ultimate, Rainbow Six, Rocket League, Fifa Online 4, Halo, and Call of Duty. The organization is decorated with many popular celebrities and athletes, including NFL star Lebron “FaZe Bronny” James Jr., Kyler “FaZe K1” Murray, Lil “FaZe Boat” Yachty, and Faze Snoop (Snoop Dog). 

It will be interesting to see how the stock market responds to a company like FaZe Clan, which is the first esports and gaming lifestyle company to be listed on the Nasdaq. In a recent interview with The Washington Post, Faze’s CEO said the company plans to expand outside of gaming, citing gambling, fan clubs, ghost kitchens, and partnerships with Web3 companies as possible fields of expansion. Considering FaZe’s future plans and their wide fan base across different esports titles, there is a fair likelihood that they will rebound from the early losses, at least that is what investors are hoping for.

Header: ESL