FaZe Clan, an esports and lifestyle company, is considering going private less than a year after making its Nasdaq debut.
Eight months after becoming public on the Nasdaq exchange through a special purpose acquisition company, or SPAC as it is more often known, according to a Sports Business Journal’s report, FaZe is “seeking a restructuring that would take it private”.
FaZe Clan, which achieved a $1 million valuation due to the deal, has now fallen precipitously in value after making its exchange debut at around $13 per share. Its share price has since rebounded to $0.53 from a low of $0.37 on March 20.
The Nasdaq exchange may issue a deficiency notice if a company’s closing price falls below $1 for 30 straight working days. For 32 straight working days, FaZe Clan has traded below the minimum closing bid price.
The report states that FaZe “would need between $40 million and $60 million to restructure the business and put it back under private hands.” According to the article, FaZe is “struggling in such endeavours.”
The announcement comes during a turbulent time for the esports industry, which is experiencing what has been dubbed the “esports winter,” with numerous businesses, from team organizations to media outlets and event organizers, cutting personnel or even discontinuing operations.
FaZe Clan’s Dire Financial Situation
FaZe Clan stated in its most recent quarterly filing that it only has $43.9 million in cash reserves, which would be sufficient to support business operations until November 2023.
On March 30, FaZe will announce its financial results for the 4th quarter and the entire 2022 calendar year. When the business explores its options for going private, these financials will give a more thorough picture of its financial situation.
The mass layoffs by FaZe, which started in December and ended in February, resulted in a 20% reduction in the company’s staff. FaZe CEO Lee Trink expressed his “optimism” about the company’s future in an internal memo. However, he added that it operated “in a completely different economic market” than when it went public.
The dropping stock price of FaZe was a topic of discussion for 100 Thieves CEO Matthew “Nadeshot” Haag on March 19. His comments on his webcast were, “You could argue it’s their fault, and they upset us by stepping in and giving that a chance; their failure to succeed on the market is a nasty thing for the esports sector.”
However, FaZe has recently dealt with harsh criticism from some players, such as Nordan ‘Rain’ Shat and Jakob ‘Teeqo’ Swaerden, which compelled the organisation to end a week-long Twitter mutiny.
On March 22, FaZe remarked, “We recognize that for too long we haven’t been the FaZe we need to be, but we’re working hard towards rectifying that. “We want to attain it with everyone and sit down with all the OGs shortly. We won’t let you down and will try our hardest to make this work.
Here’s all we knew about FaZe Clan looking to go private. Follow up with us for the most recent updates!
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