| Tags: CS:GO, General
| Author The News One
FaZe Report $53 Million USD Loss In Latest Financial Results
The reigning Intel Grand Slam winners have not been doing great on the financial front.
FaZe clan has released its financial report for the fourth quarter of 2022, which shows the company ended the year with a $53 million USD deficit. They have also reported an increased revenue of $70 million, but it was not enough to offset the losses they incurred in the financial market.
How Has FaZe Suffered Such An Enormous Financial Loss?
FaZe Clan became a public company last year following a $725 million SPAC merger with B. Riley Principal 150 Merger Corp. SPAC (Special Purpose Acquisition Company) is a stock market listed shell company. These types of companies have no commercial activities. They raise money through IPOs and acquire or merge with other companies.
We’ll be at the Nasdaq tower in NYC ringing the bell tomorrow morning as FaZe goes public! After the ceremony we’ll be doing a meet and greet roughly around 9:30am. Hope to see you there! 😤 #FaZeUp pic.twitter.com/BpvJKpJFMN
— FaZe ZooMaa (@ZooMaa) July 19, 2022
A SPAC merger allows private firms easier access to the market with fewer regulatory restrictions. In recent years, however, SPEC merger companies have performed poorly, and that trend continued with FaZe. They began trading at NASDAQ (National Association of Securities Dealers Automatic Quotation System) under the ticker FAZE, but they had a far from ideal start to life as a public company as their share prices dropped by 25% on the very first day.
FaZe CEO CEO Lee Trink was not concerned about seeing many SPAC companies struggling for survival. He was confident that SPAC was the right strategy for the company to go public.
“I understand why other companies have been criticized for going public via the SPAC vehicle. But for us, it really fits,” the 52-year-old said.
The share prices, however, kept plummeting, and now the share is trading at a meager $0.59 USD at the moment, a 95% decline from their opening price of $13 USD per share.
FaZe's net loss amounted to $168.5 million, with a one-off debt extinguishment charge related to its public listing, which resulted in the conversion of “Legacy FaZe” debt into common stock. The loss stands at $53.2 million USD without considering the debt-extinguishment charge.
The company expected strong interest from investors, particularly from the Gen Z generation, after they went public. But FaZe shares never attracted sizeable investor interest. As the prices kept tanking, initial investors also pulled out, which worsened the situation even more.
How Bad Is The Situation?
FaZe is about to get delisted from the the NASDAQ because it's share price is too low. They have 180 days to turn the company around before it gets dropped from the exchange. I think this problem was caused by overvaluing the brand at $1 Billion to start with. pic.twitter.com/Aa3qCmjkGd
— Drift0r (@Drift0r) March 27, 2023
The NASDAQ has sent a deficiency notice to FaZe after their stock price stayed below the $1-mark for more than 30 consecutive business days. FaZe share prices must stay above $1 for at least ten business days in a row over the next 180 days for the esports giants to avoid delisting. They also trimmed their staff by 20% in February, which does not paint a gleeful picture of their finances.
“We are optimistic as ever about the future of FaZe Clan,” Trink wrote in an open letter to FaZe shareholders. “We believe we have a gifted roster of esports athletes and content creators, a talented and dedicated team committed to our mission, and a loyal fan base that continues to grow and engage with our brand.”
The FaZe hierarchy is convinced that there is no need to press the panic button just yet. According to their 2022 Q4 report, the company still have $37 million USD in cash reserves. The $70 million USD revenue they brought in was higher than their previous year’s income. Can FaZe continue to take a beating in the stock market, though? For now, yes. If things don’t improve over the next financial year, however, they will find the situation more difficult to cope with.