Is FaZe Clan looking to leave NASDAQ?

The North American esports and gaming outfit FaZe Clan is considering a restructuring that would take the organization private... Shubh | 24. March 2023

The North American esports and gaming outfit FaZe Clan is considering a restructuring that would take the organization private just eight months after going public in a $1 billion deal.

Esports giant Faze Clan is considering a restructuring that would see it go private as it continues to struggle financially, according to Sports Business Journal (SBJ). Faze Clan is reportedly in need of a fundraising effort totaling between US$40 million and US$60 million in order to carry out restructuring. 

FaZe Clan is in severe financial problems, and according to a recent Forbes magazine article, it could only survive until November 2023. The organization has lost more than 90% of its original worth, trading at 53 cents on NASDAQ as of today. Moreover, FaZe Clan stated in its most recent quarterly filing that it has only $43.9 million in cash assets.

FaZe Clan’s stock is on a free fall

The value of FaZe Clan’s stock fell considerably in the days following the company’s NASDAQ listing in July 2022. Shares of FaZe Clan have fallen in value for a number of reasons, including unmet investment promises and uncertainty over the company’s ability to cover expenses after the current fiscal year.

FaZe Clan revealed a $9 million loss in Q2 in August 2022, which was a huge setback for the North American organization’s recently listed stocks. The situation only became worse when the organization announced that out of the $100 million in backstop commitments made prior to the SPAC, more than $71 million defaulted on its obligations.

Following the news, FaZe Clan made a statement claiming that it would sell up to 70 million shares of its stock in an effort to raise money. As a result of this share dilution, the value of existing shares decreased by as much as 34%, and some investors left the company in fear of an inevitable value fall.

FaZe Clan’s stock is likely to be delisted from NASDAQ

After reaching a low of $0.37 on March 20, FaZe is now trading at $0.53 a share. The company is thought to have violated Nasdaq compliance after seeing its shares closing trading below $1 for 44 straight days.

According to NASDAQ’s rules, a corporation will receive a deficiency notice from NASDAQ if it trades for 30 consecutive business days below the necessary $1.00 closing bid price. Any corporation that receives such notice will have a 180-day compliance time. Nasdaq Staff will issue a delisting letter if an organization is unable to fix its bid price deficit within the applicable compliance period.

Header: FaZe Clan