The Rise & Fall of FaZe Clan

In the ever-evolving gaming collectives, one name has stood out above all others: FaZe Clan. However, this beloved gaming conglomerate is currently facing a tumultuous period, teetering on the brink of obscurity just months after making history as the first esports and gamer lifestyle brand to grace the Nasdaq.

The Birth of a Gaming Giant

Back in 2010, FaZe Clan emerged on the gaming scene via YouTube. Initially, it was a group of gamers known for their remarkable Call of Duty gameplay and jaw-dropping trick shots. Over the years, FaZe evolved into something more significant – an esports empire that proudly billed itself as “a digital-native lifestyle and media platform rooted in gaming and youth culture.”

While FaZe Clan undoubtedly cemented its status as a gaming community icon, recent events have overshadowed its future. With stock prices plummeting and its once-loyal creators airing grievances, the organization’s destiny is now uncertain.

Esports/ Instagram | Six months down the road, FaZe’s stock is dropping and then dropping some more.

FaZe Clan’s Brave Leap into the Stock Market

The pivotal moment came when FaZe Clan declared its intention to go public in October 2021. Going public meant becoming a publicly traded company and listing on the stock exchange – a move rife with opportunities. It could pave the way for FaZe to explore new horizons like gambling, virtual dining, and subscription models, not to mention generate considerable publicity.

However, as YouTube commentator Jabroney revealed in a recent video titled “How One Bad Choice Destroyed FaZe (-95% in 6 Months),” FaZe’s unorthodox approach to going public might have sowed the seeds of its downfall.

“Going public on the New York stock market is a rigorous process,” Jabroney began, emphasizing the complexities involved, such as audited financial statements and adherence to accounting principles.

But FaZe Clan didn’t tread the conventional path. Instead, CEO Lee Trink collaborated with Dan Shribman of investment firm B. Riley Financial to take an alternative route – the Special Purpose Acquisition Company or SPAC route. B. Riley would establish a shell company dedicated to raising funds to acquire FaZe, ultimately merging the two entities.

callofduty/ Instagram | FaZe Clan attributed the decline in revenue primarily to a slowdown in brand sponsorship revenue

FaZe Clan secured over $100 million in this merger before its public debut, boosting its valuation from around $300 million to a staggering $1 billion. But, as Jabroney pointed out, there was a catch. Most investors hadn’t provided $100 million in cash upfront. They had signed non-binding agreements, pledging to buy shares at $10 each post-IPO. If they reneged, B. Riley Financial would cover the deficit to get FaZe off the ground.

The Sudden Decline

Fast forward to July 20, 2022, when FaZe Clan debuted on the Nasdaq. Initially, the stock showed promise, with shares fluctuating. By August, the shares peaked at approximately $20, making FaZe “the first esports organization with a $1 billion valuation.”

However, FaZe’s fortunes took a sharp nosedive. By the end of September, a staggering $70 million of private investments in FaZe had vanished, as 92% of the merger shareholders cashed out. This left the organization in disarray, with share prices plummeting to under $5 and plummeting even further to $1.78 in November, according to Matt Craig’s report in Forbes.

Since then, FaZe’s situation has gone from bad to worse. The organization laid off roughly 20% of its workforce in the past month following a precipitous stock slump on February 16. Adding to the misery, Nasdaq issued FaZe a deficiency letter last week, threatening to delist the organization’s shares.

Ron Lach/ Pexels | FaZe Clan’s members and the organization itself have a massive presence on social media platforms like Twitter, Instagram, and TikTok

Creator Critique

Adding to FaZe Clan’s woes, long-time creators from within the fold have publicly criticized the organization. Teeqo and Rain are among the prominent figures who have voiced their concerns.

Teeqo, in a video posted on March 13, garnered over 2.5 million views. In it, he claimed that FaZe Clan owners had consistently failed to compensate him throughout his 12-year tenure with the organization adequately.

“All these years, we always hear ‘talent first, talent is the most important thing,’ but no, we are not,” he declared. “These recruits you make, these celebrities like Snoop Dogg and his son, have more money and shares than many FaZe members.”

In conclusion, as FaZe Clan shifts its focus towards larger celebrity endorsements and attracting investors, the original creators seem to be taking a back seat. With longstanding members coming forward to critique what FaZe has become, the organization is unraveling, and financial troubles only exacerbate the situation.

So, the question that looms large is: can FaZe Clan weather this storm? Or are we witnessing the permanent decline of the once-mighty FaZe Clan? Only time will tell.