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Esports’ Astralis considers delisting as Faze Clan posts US$53.2m loss

Danish company initiates strategic review following fall in stock price.

3 April 2023 Ed Dixon

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  • Astralis became first esports organisation to conduct an IPO
  • Company also exploring merger, issuing new shares, and selling assets
  • Faze went public last July but could be delisted

Danish esports organisation Astralis is initiating a strategic review, which includes a potential delisting of the company’s shares.

Astralis became the first esports team to launch an initial public offering (IPO) when it went public on the Nasdaq First Growth Market Denmark in December 2019. However, as of 28th March, the Copenhagen-headquartered company’s price per share has dropped by more than 65 per cent from its original listing of DKK 8.95 (US$1.05).

Astralis has admitted its shares are now trading at a ‘material discount’ to the price of their IPO, prompting the company’s board of directors to take action.

Though the esports firm’s hierarchy have insisted Astralis remains in a position to generate ‘positive returns’ for its shareholders, a delisting is one of several options being considered. Merging with another company, issuing new shares, or selling all or some of Astralis’ shares and assets are also on the table.

A combination of all or some of those avenues could happen after the review, for which Astralis did not give a timeline. The company is best known for competing in Counter-Strike: Global Offensive (CS:GO) and also has FIFA and League of Legends (LoL) teams.

Despite the uncertainty, Astralis has not revised its targets for the 2023 fiscal year. The company wants revenue to be in the range of DKK 85 million (US$10 million) to DDK 90 million (US$10.6 million), which is in line with 2022. Earnings before interest, taxes, depreciation and amortisation (Ebitda) is projected to be between DKK 0 million and DKK 5 million (US$590,000).

Astralis’ struggles come as fellow esports organisation Faze Clan, which went public last July, revealed a net loss of US$168.5 million for the 2022 financial year. This included a non-cash, one-time accounting charge of US$115.3 million, which related to the replacement of a prior debt facility with new shares of the public company under the terms of the go-public transaction.

Excluding the charge, Faze’s net loss would have been US$53.2 million, compared to US$36.9 million in 2021. Adjusted Ebitda was up 21 per cent year-over-year (YoY) to US$33.6 million, while revenue rose 32 per cent to US$70 million.

Faze ended 2022 with US$37.2 million in cash and equivalents. The company added that it believes its cash position is adequate to fund its operations and support investment plans for 2023.

Faze also said it was actively evaluating opportunities to enhance its capital structure to better support its long-term growth plans. The company opted not to provide guidance for 2023 ‘in light of macro uncertainty’, though stated it was planning for revenue growth and a ‘significant narrowing’ of Faze’s adjusted Ebitda loss.

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