FaZe Clan Stock — Analysis of the North American Organisation Entering the Stock Market

In the past the North American esports organization FaZe Clan took another step towards creation of the solid basement for formation of the future business model and announced the long-awaited merger of their business with the investment fund B. Riley Principal 150 Merger Corp.

This step allowed the club to enter NASDAQ, releasing stocks and warrants with tickers "FAZE" and "FAZEW" respectively. As a result, FaZe Clan declared itself a big company that goes beyond esports and plans to expand to various spheres.

However, the organizers’ most optimistic plans were not to come try as the stock market rejected FaZe Clan and caused an extra headache for the club. In other words, the plans of the company to enter the stock market failed and now the management is trying to minimize potential threats that the current situation implies.

How was the cost of FaZe Clan’s stock changing on the stock market?

Right from the very beginning after the merger with B. Riley Principal 150 Merger Corp the quotes of the North American on NASDAQ stopped at +-$10. At some point their cost rose to $13,02 but it returned to the original figure.

At the beginning of August the quotes jumped to $20 per one and peaked, making the organization believe in the possible success.

However, FaZe Clan was not happy for a long time as very fast the price returned to the average value around $10 with minor fluctuations up.

However, in autumn the North American club submitted S1 to SEC where they expressed their intention to release new stocks and also have a period of inside sales. Before that the organization demonstrated their financial report for the second quarter of 2022 which is impossible to be overlooked for evaluating the following events.

Based on a combination of factors, FaZe Clan’s quotes on the stock market plummeted to stop at $9,26 by the end of September. But it was not the end of the club’s adventures on the stock market as later the team continued to watch a sharp fall of the quotes.

By the end of the year the situation on the market got worse as in December the price of one stock of FaZe Clan stopped at the mark lower than $2. In the first month of the new year the quotes plummeted again to reach $1 per one.

Nevertheless, the trend went on and by the end of January FaZe Clan saw the figure that brought loads of disappointment to the management of the club.

Threat of delisting FaZe Clan on the market

At the end of January the value of one regular FaZe Clan’s stock on NASDAQ went lower than $1. According to the rules of the market, the club can be excluded from the market if the situation does not get better during one month.

In fact, the organization got into distress as it risks getting a non-compliance notice. If the price of one stock does not grow during one month, FaZe Clan can be delisted from NASDAQ.

We know that to restore compliance with the demands, listing must maintain “the cost of the close of trading of $1 or more for 10 consecutive working days".

If the company is unable to eliminate the deficit of the offer price in the required period, Nasdaq will send a letter about removal from the list.

We should not forget that in the future the price of stocks can go even lower as employees of FaZe Clan will start selling their stock after the end of the locked period of six months.

Why were FaZe Clan unable to get a foothold on the stock market?

Problems of the North American organization lie in a long-term strategy. As we can understand from the tendency, the management of the club is handling the short-term tasks well, implementing minute-by-minute tasks successfully and attracting big sponsors.

However, when it comes to big business and serious outcomes, the report shows that FaZe Clan cannot provide a long-term model of development. If we look at all recent reports of the organization, over a half of the investments of the club have gone nowhere. Therefore, the company cannot cope with the objectives and misuses the available funds.

We can spot an interesting trend: each publication of reports leads to weakening of the club’s quotes.

Taking into account the negative dynamics on the stock market, the overall capitalization of FaZe Clan is also plummeting. It can lead to serious problems in the long run and possible loss of partners.

If we speak about the esports component, FaZe Clan remains one of the most cost-effective clubs on the stage. However, if we look beyond the industry, the existing business model of the company is unable to ensure financial stability to the project in the long run.

In other words, FaZe Clan, as a financial project, cannot yield profits relying on external investments. If we refer to figures, in the first three quarters of 2022 the revenue of the organization was $48,600,000 but only $14,000,000 of the money was earned thanks to advertisement and esports success.

Should we wait for the club’s success in the future?

At the beginning of 2023 the organization signed a few big deals with Porsche and Nike, and also represented a new managing team. It goes without saying that these steps are aimed at improving the situation while FaZe Clan’s stocks on the market managed to overcome the mark of $1 per one, swimming out of the delisting threat even if temporarily.

Nevertheless, in the long run the organization will have to do a lot of work to model the business project and start earning through building the long-term strategy of development.

We cannot say that FaZe Clan is going to have a bright future but we should not believe in an obvious financial collapse of the organization. In any case the cost of the brand is big enough to stay afloat and develop their commercial portfolio. In extreme cases the club always follows trends which is proven by the attempts of the company to try themselves in Web3, NFT and metaverses. Considering all the factors, FaZe Clan will keep on functioning. But the answer if the company remains on the stock market still should remain open.