Is FaZe Clan worth investing in? Here’s the history of the stock

By Olivia Richman

|

Oct 1, 2022

Reading time: 2 min

FaZe Clan made headlines when it became the first esports organization to go public on the NASDAQ. But it seems that the value of its stocks are not where they used to be.

FaZe Clan went public in July of 2022, allowing fans and investors all over the world to own a piece of the hype-fueled esports organization. FaZe boasts talented rosters in Call of Duty, Fortnite, Counter-Strike: Global Offensive, and a strong streaming squad. In August, the share price reached a peak of over $20.

Since that peak in August, however, FaZe Clan’s share price has been quite shaky. Over the last few months, the stock price was quite volatile. After the company’s S1 filing on September 26, the stock price dropped significantly.

FaZe Clan’s stock price is now a little over $9.

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This is the lowest that FaZe Clan’s stock price has been since the SPAC merger in July. The 30% drop is a major decline for FaZe Clan shareholders.

What has caused the FaZe Clan stock price to fall?

The S1 filing last month allowed for the organization to issue new shares and conduct insider shares for a short duration. The plan is to issue nearly 6 million new shares, which has caused the cost of each share to be reduced. This is due to there being more shares available.

According to VentureBeat, over $71 million of the organization’s $100 million backstop commitments “defaulted on their obligations.” A backstop is like an insurance policy in case new shares are not sold, allowing them to be purchased by a guarantor.

Another reason that FaZe Clan’s stocks have dropped is that the entire NASDAQ composite index has fallen 10% this month. All companies on the stock market have been negatively impacted.

So should you invest in FaZe Clan? Not right now. The market is very unstable and it’s expected to keep dropping, FaZe included.

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