Popular gaming and esports group FaZe Clan announced that it will become a publicly traded company, with an approximate valuation of around $1 billion. FaZe Clan will merge with acquisition group B. Riley Principal 150 Merger Corp to form FaZe Holdings Inc., and will appear on the NASDAQ under the ticker symbol “FAZE”. The merger will also net FaZe clan $291 million, which the group says will be used to “fund FaZe Clan’s global multi-platform growth strategy spanning content, gaming, entertainment, and consumer products, including potential acquisitions.”
For you, the fans.
Our biggest announcement to date: FaZe Clan is going to become a publicly traded company. https://t.co/HaHJtFIglW pic.twitter.com/YNYLpvVIRo
— FaZe Clan (@FaZeClan) October 25, 2021
The merger and public offering are different from a traditional IPO, though. Specifically, FaZe will go through a SPAC or Special Purpose Acquisition Company deal. Put simply, a SPAC is a shell company that people can trade on the stock exchange, which can then merge with a private company like FaZe Clan later down the line. The merged company then takes the place of the shell company. The result is that smaller companies like FaZe can benefit from better business projections that “aren’t allowed in initial public offerings,” according to the Wall Street Journal.
This means that the $1 billion estimated price tag on the new FaZe Holdings Inc. isn’t actually as solid a number as they’d like you to think. As FaZe states in its own announcement page, the combined company is “expected to have an implied equity valuation of approximately $1 billion inclusive of nearly $275 million in cash on its balance sheet.” It’s also important to note that FaZe Clan—which started off as a collective of Call of Duty and Counter-Strike content creators—is mainly centered around social media influencers, creators, and businesses that monetize content online.
While FaZe Clan touts its ability to produce “premium content, merchandise, and consumer products” as well as its partnerships with advertisers and national brands, some are wary of the company’s $1 billion valuation. Kotaku’s Luke Plunkett also notes how most of their fanbase—most of whom are under the age of 18—can’t even legally buy the stocks that they’re selling, even though FaZe themselves are saying it’s “for the fans.”
But hey, if you say something is worth $1 billion dollars and someone buys it for $1 billion, I guess it’s worth $1 billion?
[Source: Kotaku]
