FaZe Clan goes public on Nasdaq via SPAC merger; share price falls 24% in first day of trading

Lee Trink, FaZe Clan

The first publicly traded Gen-Z influencer company received a lukewarm response from Wall Street on its debut day.

FaZe Clan completed its merger with a blank-check SPAC (special purpose acquisition company) on Wednesday (July 20).

The deal valued the company at $725 million, according to reports.

That was below FaZe Clan’s previously reported $1 billion valuation target, which would have made the firm the first esports unicorn, according to Forbes.

The American esports and gaming lifestyle company, which counts Snoop Dogg among its directors, fell 24% at market close on the Nasdaq on its first day of trading.

The Verge in 2018 branded FaZe Clan as the “Supreme of esports” as it has become the gaming equivalent of a streetwear lifestyle brand.

FaZe Clan was founded in 2010 as a collective of Call of Duty players who eventually launched a YouTube channel that now counts nearly 9 million subscribers.

The group then morphed into an organization of gaming celebrities and esports pros, forming collaborations with celebrities in the music and sports industries including American rapper Lil Yachty and LeBron James’ son.

FaZe Clan has also bridged the world of esports and music.

In 2018, it appointed Lee Trink, formerly president of Capitol Records and a former general manager of Virgin Records, as its CEO.

Trink has worked with artists like Kid Rock, Katy Perry, Lenny Kravitz and The Rolling Stones.

“FaZe Clan boasts a diverse and robust talent and influencer network including global celebrities, esports athletes and content creators.”

FaZe Clan

Zach Katz, another music veteran and the former president of BMG in the US, also joined FaZe Clan in May of this year as President and COO.

“FaZe Clan boasts a diverse and robust talent and influencer network including global celebrities, esports athletes and content creators,” the company said as it announced the completion of its merger with SPAC, B. Riley Principal 150 Merger Corp., on Wednesday.

SPACs are blank-check firms that are created to acquire or merge with an existing firm to take them public without the need for another IPO.

In a recent investor presentation, B. Riley noted that FaZe Clan has expanded its gaming roots and become “a voice of youth culture” with a roughly 500 million combined social media reach as of the end of the first quarter of 2022.

FaZe Clan has more social interactions than the next eight esports teams combined, and is evolving from a digital publisher into an IP engine, diversifying into a range of content platforms to potentially cover Spotify, Apple Music and Apple TV, Netflix and HBO. The company currently distributes its content across YouTube, Twitch, Facebook, Instagram and TikTok.

In April 2020, FaZe Clan closed its series A funding round, raising $40 million from a group of influential investors including Grammy award-winning rapper and record producer Pitbull, American rapper Yo Gotti, Three 6 Mafia member DJ Paul, singer and songwriter Ray J, and Troy Carter, co-founder and CEO of music and technology company Q&A, among others.

“We have a hyper-engaged global audience and FaZe Clan is the most powerful lifestyle brand in all of gaming,” Trink said of the investment at the time.

Meanwhile, Joost van Dreunen, a New York University Stern School of Business lecturer, said FaZe Clan’s business model is “very experimental.”

“They’re a pioneer of digital lifestyle branding and post-pandemic entertainment. Basically, a bunch of cool people trying to sell merch by acting cool, and making people want to be cool like them,” van Dreunen was quoted by Bloomberg News as saying.Music Business Worldwide