Why Faze Clan’s $725 Million IPO Could Revive Sluggish SPAC Market

CBX Vibe:Controlla” Drake

By CultureBanx Team

  • Faze Clan’s $725M SPAC IPO has the potential to revitalize the beleaguered space that’s fallen 94% in the number of new listings 
  • Some of the company’s investors include Pitbull, Offset, Kyler Murray, Ben Simmons, and LeBron “Bronny” James Jr. son of LeBron James

Esports and media powerhouse Faze Clan, one of the first gaming and entertainment companies targeted specifically toward Gen-Z consumers, $725 million SPAC IPO has the potential to revitalize the beleaguered space. Through its deal with B. Riley Principal 150 Merger Corp, the newly formed company is worth $987 million, according to Sportico. With SPAC IPOs at a crossroads, falling 94% in the number of new listings from the record-setting first quarter of 2021, and a dive of 98% in value, according to Bloomberg law, perhaps Esports can be the catalyst to revive the sector.

Why This Matters: The company’s investors include rappers Pitbull and Offset, along with NFL quarterback Kyler Murray (aka “FaZe K1”), NBA guard Ben Simmons, LeBron “Bronny” James Jr. son (aka “FaZe Bronny”) of NBA star LeBron James and  Lil Yachty (aka “FaZe Boat”). Also, Hip hop artist Snoop Dogg too has joined the Board of Directors at FaZe. 

B. Riley Principal 150 Merger stockholders approved the Company’s proposed business combination with FaZe Clan onJuly15. The initial announcement did suggest the shareholders in FaZe Clan will own a total of 68% of the company. This means early investors like the aforementioned athletes and entertainers stand to make a lot of money.

About 80% of its audience is between the ages of 13 and 34, meaning the brand certainly has an in with the Gen Z market, which could prove extremely successful in the long term for Faze’s SPAC. It currently has squads engaged in Counter Strike: Global Offensive, Fortnite, and Call of Duty. Clocking over 500 million followers across their social media platforms around the globe. 

Even with its success and reach, FaZe Clan is not yet profitable. The company brought in $53 million in revenue in 2021, up from $38 million in revenue in 2020. In 2021, according to an amended SEC filing the company revealed total revenues grew by 42% Year-over-Year, but net losses also grew by 28% during the same time frame. 

SPACS do offer an important alternative to the traditional initial public offering, however, there have been numerous complaints against these types of companies. Due to this the SEC has proposed harsh new rules that, if adopted, have the potential to effectively put SPACs out of business. Nineteen companies have canceled SPAC mergers in 2022, according to Axios.

What’s Next: It’s plausible the  SPAC market is more damaged than dead, given that there are over 120 mergers still waiting to close. Faze plans to use its IPO money to invest more heavily in web3 tools and experiences.The company is using the new ticker, ‘FAZE’ and ‘FAZEW’ to actively trade on the NASDAQ.

CBX Vibe: “Controlla” Drake

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CultureBanx Team

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