Faze Clan stock price plummets immediately after going public

One of the largest esports teams in the world went public yesterday but its stock price took a dip during the first day of trading.

Faze Clan, one of the largest esports teams in the world, went public on the stock exchange yesterday at a valuation of nearly $1 billion AUD. However, in the 24 hours since its debut, Faze’s stock plummeted over 25%, closing the day at $9.36 USD a share on the NASDAQ.

Esports teams have made a big splash in recent years as profitable businesses, and almost none have succeeded as well as Faze Clan. Ranking fourth in Forbes’ Most Valuable Esports Companies list, the competitive esports professional and social media influencer business was acquired back in October for a stunning $1.5 billion AUD, but since then the value has dropped to just over $1 billion AUD.

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Featuring over 90 influential personalities across gaming and esports, Faze Clan has a combined 500 million global followers across their social media accounts and has competitive teams in a number of video games, from Call of Duty and Counter-Strike: Global Offensive to Super Smash Bros. Ultimate and FIFA.

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Making their debut on the Nasdaq under ticker $FAZE, their shares dropped almost immediately by 25%. This is not uncommon for SPACs, or special purpose acquisition companies — in recent years, businesses purchased or merged via SPACs have dropped in value, according to a report by CNBC.

A FaZe Clan team competes in CS:G

Faze Clan has its share of troubles as well. From manipulative cryptocurrency scams to racist and abusive behaviour, Faze has had to remove several of its personalities due to controversy.

CIO Daniel Shribman of B. Riley, the acquisition company that merged with Faze Clan, stated that Faze is an “edgy, deep-in-youth culture, deep-in-gaming-culture” and “If there were no controversies, that would be pretty boring.” This is in direct contrast to what ex-employees of Faze are saying, with one stating that “kids with no experience in business or branding are calling the shots,” and referring to FaZe as a “s**t-show.”

The falling stock hasn’t stopped Faze Clan’s investment ideas, however. Chief Executive Officer Lee Trink stated that web3 is the next step for the influencer juggernaut, despite the falling interest (and money) in cryptocurrency. Faze plans to invest in the metaverse, and is actively pursuing partnerships with interested companies.

Faze isn’t the only esports organisation to face some controversy. Team SoloMid, another esports group, recently received punishment for its CEO, Andy Dinh, for abusive behaviour towards players deemed to be underperforming.

Original reporting by Bloomberg.

Written by Junior Miyai on behalf of GLHF.