Faze Clan announced that it will go public through a merger with a blank check company at a valuation of $1 billion, marking it as the first esports company to make this bold move.
Never heard of Faze Clan?
Faze Clan is an esports organization with the greatest following in the world; if you don’t believe us, let’s throw some stats. With almost 12 million followers on Instagram, 6 million on Twitter, and a reach of more than 345 million throughout their members’ platforms, Faze has its social presence undeniable. Besides operating as an esports organization, Faze uses its vast popularity to promote its merchandise, with sales of $40 million in 2020 and $50 million in 2021.
Faze operates with a professional team in almost every game, starting with CS:GO, Fortnite, Call of Duty, Valorant and partnerships with successful brands like Nissan, Manchester City, G Fuel, Vix, Verizon and others.
What Is Expected To Happen?
Faze Clan will go public with the help of a SPAC, meaning a special purpose acquisition company. The sole purpose of this latest Wallstreet trend is to buy or merge with companies that try to avoid going through a risky IPO. According to the latest press release that Faze shared, they claim to have $275 million on their balance sheet and have raised $118 million from private investors. The valuation of the company is expected to be around $1 billion.
Should You Invest in The Faze Clan IPO?
Yes, you should. When you see the rise of gaming and the numbers, it will be very clear where this industry is going. According to one research done by J. Clement, the forecasts show that the value of the video game market will pass the $200 billion mark by 2023.
This does not persuade you? Faze Clan has investors like Pitbull, Ben Simmons, Offset, and Bronny James, promoting it constantly, ensuring you don’t miss the famous Faze sign.
If you truly believe in the gaming industry, then the Faze Clan stock is the right choice, not only because it’s the best esports company right now but also because it’s a trailblazer, and we all know what happens when you catch a train like that early.
Faze Clan IPO Update
Since publishing this article, Faze Clan went public on July 20th with the ticker FAZE. FAZE stocks began trading at $9.98 and are currently sitting at $11.89 per share. Despite that, the launch didn’t go without controversy. On the first day of trading, the stock plunged 25%. The SPAC in charge of taking the company public stroke a deal with Faze for around $1 billion. However, the deal is now worth $725 million. Faze Clan CEO Lee Trink feels confident in the decision to go public via SPAC. In an interview back in October last year, Trink said: “I understand why other companies have been criticized for going public via the SPAC vehicle. But for us, it really fits.”
The SPAC that Faze decided to go public with is B. Riley Principal Commercial Capital, and they gave Faze a $20 million bridge loan. During rough economic times and scarce market conditions, the $20 million loan came as much-needed capital for Faze, who were going through their own problems in the gaming industry. This was mainly due to many video games canceling tournaments in fear of the virus. Faze competes for titles in many games, but other esports organizations had it much worse.
During the pandemic, the $20 million loan managed to help Faze with securing capital. An analyst with The Esports Observer said that Faze doesn’t clearly understand how to make money in these troubling times. But Trink believes the organization is on a good path. They plan to hire more content creators, help grow their platforms, and monetize the audiences through merchandise and branding. But not all is doom and gloom.
Faze is believed to sign a deal with DraftKings, an American fantasy sports and sports betting company. Faze’s target demographic is Gen-Zs. They expect the global market size to exceed the initial $13 billion in the coming years.