Fazed

Viral gaming brand FaZe Clan goes public, but its 500M-strong following may not shield it from the SPAC-pocalypse

Thursday, July 21, 2022 by Robinhood Snacks |

FaZe SPAC... Gaming influencers just took themselves public. FaZe Clan launched as a gaming YouTube channel in 2010. Think: mostly guys in gaming chairs posting “Call of Duty” "sniping" videos. Today, FaZe is an esports and media company with 93 members (including Snoop Dogg). In May, Forbes ranked it the fourth-most-valuable esports company. Yesterday:

  • FaZe went public on the Nasdaq after completing a $725M merger with a SPAC (aka: special purpose acquisition company) called "B Riley Principal 150 Merger Corp." — claaaassic SPAC name.
  • The debut is a milestone for "creator economy" brands, most of which are private. FaZe has 500M followers across socials like YouTube, Twitch, and TikTok.
  • Fazed: Despite its viral clout, FaZe stock plunged 24% on its first trading day. FYI: it was planning to go public last year in a $1B deal, but that didn’t pan out.

Unique timing… FaZe’s debut comes at a time when public offerings and SPACs have been struggling. Given the inauspicious macro environment, many planned SPAC deals have been canceled or put on ice. SPACs boomed mid-pandemic, accounting for ~70% of all IPOs last year. DraftKings, Virgin Galactic, and Opendoor are just a few that went public through a SPAC. Now, the oversaturated market has lost steam and is riddled with losses.

THE TAKEAWAY

Followers ≠ investors… FaZe calls itself the “first creator-based brand to go public,” but its impressive following may not be enough to lure investors. While it’s forecasting that revenue will nearly double this year to $90M, FaZe also expects a widening loss of $19M. In this unsteady environment, some investors have ditched “growth stocks” in favor of companies with steady profits. Companies that merged with SPACs lost half their value in the first six months of this year.