FaZe Clan goes public and drops 25% in first day
The esports and lifestyle brand FaZe Clan has gone public on the Nasdaq, touting itself as a 'creator economy' company with an initial valuation of $725 million. This prompted an immediate selloff of FaZe stock, and a 25% plunge in its valuation on the first day.
FaZe began trading thanks to an SPAC merger, a new and somewhat controversial vehicle in financial markets because, well, the recent history isn't great. A SPAC is a special purpose acquisition company that exists solely to buy an existing private business and then float it on the public markets, but many companies that have followed this route have ended up performing extremely badly; or, to put it another way, have been in the market's eyes over-valued. SPACs have become so unpopular, in fact, that US regulators are currently looking into whether they should be allowed in their current form.
Sounds slightly dodgy, and that sounds like FaZe alright. The group was founded in 2010 and now consists of over 100 employees, mostly esports pros and content creators, alongside celebrities such as Lil Yachty and Snoop Dogg who apparently sit on the board. There's no arguing with the group's reach, however: it boasts over 500 million followers across its various social media accounts.
«I understand why other companies have been criticized for going public via the SPAC vehicle. But for us, it really fits» FaZe CEO Lee Trink told CNBC(opens in new tab). Trink joined Faze in 2018 and was previously president of Capitol Records. «We think we’re the first Gen Z native brand to go public; we’re certainly the first creator-based brand to go public.»
FaZe had announced plans for the SPAC merger last year, at which time it claimed a valuation of $1 billion. Since then going
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