FaZe (is) down

Phillip Rasmussen
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If there was any doubt that investing is esport is a dubious venture, look no further than to FaZe and their new publicly listed company.

In their latest S1-filing, the company announced that $71.4M of it’s $100M guaranteed investment, defaulted on their obligation, prompting their financial backer B. Riley to invest an additional $53.4M to honour the guarantee.

The markets subsequently reacted to this news by dropping the share price from $14,75 a week ago to $9.68 today, shaving a hefty 30% of the company’s value.

Now if we are to unpack what has happened, the investors in the SPAC that merged with FaZe to form the public company, were not in on the FaZe-hype at all.

Instead of exchanging their investment for FaZe stock, 92% of the investors chose to pull out and get their money back, with the average for the same period being 24%. In non-investor words: this is not good.

It’s still early days for the stock however and so far FaZe have kept the floor during the first 6 months, while the broader economy and indexes have tumbled down.

For Astralis, another of the publicly listed esports companies, things aren’t so rosy as we near the 3 year anniversary for them going public.

Since launch the stock has lost almost 80% of their value, although they still do have their LEC spot which is rumoured to be worth in the vicinity of €30M (more than the company is valued at altogther at the moment).

So, if you’re thinking about investing at the moment, you’re probably better off buying skins than esports stock, as insane as that might sound.

October 2, 2022

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