FaZe Clan, a digital entertainment and one of the biggest esports companies in the world, is now trading on the Nasdaq after it has completed a SPAC merger with B. Riley Principal 150 Merger Corp, as per The Verge.
The company can now be publicly traded. The merger valued FaZe at $725 million. It did not meet the original $1 billion valuation that it initially had when the merger was announced in October.
FAZE Shares Sank During Debut on Wednesday
FaZe Clan is comprised primarily of esports competitors and content creators. It is an online media company made up of 93 members. There are also celebrities like Snoop Dogg, who is part of the company.
Over 500 million follow FaZe Clan social creators across multiple platforms like YouTube, TikTok, and Twitch. Forbes also ranked FaZe Clan as the fourth-most-valuable esports company.
Upon the merger, the company started trading on the Nasdaq under the ticker FAZE. Unfortunately, upon their debut on Wednesday, FAZE shares sank, and they finished the first day of trading down by nearly 25%.
A SPAC, or special purpose acquisition company, works by purchasing an existing private business and making it available to the public markets.
During the pandemic, SPACs became popular because they served as an alternative to the traditional initial public offering. Unfortunately, the good performance of SPAC did not push through as many planned deals remained on hold or were canceled.
A lot of companies that utilized the SPAC merger to go public did not perform well in the last few years. Some even lost around half of their value through the first half of 2022.
However, despite the trend and the dangers of new SPAC regulation, FaZe Clan CEO Lee Trink said that he feels going public through SPAC was the right decision for his company.
"I understand why other companies have been criticized for going public via the SPAC vehicle. But for us, it really fits," said Trink, as cited by CNBC.
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FaZe Clan CEO Plans to Bring More Creators
The SPAC merger was initially announced last October. FaZe Clan was initially valued at $1 billion, but nine months later, the deal is down to $725 million.
According to business analyst Tobias Seck, FaZe Clan initially planned to go public in the first quarter of the year, but it did not push through.
The company was given a $20 million bridge loan by B. Riley Principal Commercial Capital in March.
As an alternative to reliance on advertising revenue, FaZe Clan will be bringing more creators and helping them grow their own community.
Trink said the company will fund investment. Moreover, they will create the product and own a bigger piece of the upside.
The FaZe Clan CEO spoke of upcoming projects such as expanding a gambling business with DraftKing, whereas the esports business will be a smaller part of the company's revenue in the future.
According to market sources familiar with the deal, it is expected that FaZe Clan will raise nearly $60 million in proceeds from the SPAC deal.
Even after going public, current stockholders continue to own 77% of the company.
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