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Faze Clan risks Nasdaq delisting as stock price plummets

Esports company only went public last July via SPAC merger.

27 January 2023 Ed Dixon

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  • Shares slumped to 75 cents this week
  • Companies that close below US$1 for 30 consecutive days could trigger delisting

Esports organisation Faze Clan is at risk of being delisted by the Nasdaq stock exchange, just six months after going public.

Faze Clan’s protracted journey to going public concluded last July when it wrapped up its merger with the B. Riley Principal 150 Merger Corp (BRPM) special purpose acquisition company (SPAC). The deal valued the combined entity, renamed Faze Holdings, at US$725 million.

Since then, Faze Holdings has seen its stock price fall from a high of US$24.69 on 30th August 2022 to just 75 cents on 26th January 2023.

As reported by Fast Company, Nasdaq rules state that any company that fails to close above the US$1 mark for 30 consecutive days is issued a deficiency notice, which can trigger a delisting.

The notice, though, is not instant. Once it is issued, the company has 180 calendar days to return to compliance, meaning it must close above US$1 for ten consecutive days. Some companies also receive a grace period of another 180 days if they meet special requirements.

Though initially making its name as an esports organisation, Faze Clan now bills itself as a gaming, lifestyle and media brand, claiming to have a fanbase network of approximately 500 million across its combined social platforms. Investors include National Basketball Association (NBA) aces Ben Simmons and Jamal Murray.

SportsPro says…

Faze Clan went public last summer in a market that has shrunk considerably, with many organisations taking the SPAC route in 2022 even losing half their value through the first half of the year.

Shares for Faze Clan started to fall rapidly in late September but a delisting isn’t necessarily a death sentence. Companies can bounce back from it.

However, Faze Clan has never been profitable and relies heavily on external investment. As reported by Forbes, the esports giant had US$43.9 million in cash on hand as of 30th September 2022, enough to fund current operations only until November 2023.

New investors and advertisers will be needed, but Faze Clan’s current Nasdaq situation points to an ongoing issue with esports. The sector, specifically the players themselves, can attract large audiences but competitive gaming organisations are yet to find a way to turn that into profit.

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