November 02, 2022
Cultural phenom FaZe Clan got its long-awaited opening trade last month. It became the first “esports company” to go public, but the success of the decade-old gaming and lifestyle brand will likely offer hints of whether or not others will try their own luck.
The pandemic represented a massive opportunity for esports brands like FaZe Clan, which benefited from stay-at-home orders and unprecedented new interest in streaming and social media content. Over a dozen esports companies raised money from venture capitalists during the pandemic era, with privately-traded firms TSM and 100 Thieves pulling off the greatest hauls.
Of course, in recent months, both names have announced layoffs as the global economic environment changes. That lies in stark contrast to FaZe Clan, which finally got its opening trade last month after announcing it would go public in a SPAC merger late last year.
It sputtered out of the gate before more than doubling. The esports giant and first-mover is still sitting high and mighty though: it’s up 65% since the stock’s first day of trading on July 20. The stock, which trades under the ticker $FAZE, posted $18.8 million in revenue in Q2 2022 according to its latest 8-K.
The chart is rising in large part because of interest around the misunderstood business of esports. Since there are few comparable brands on the stock market today, investors have struggled to compare FaZe to other businesses. Until further notice, they seem to have given the lifestyle brand a premium you’d expect from a tech company–which might lead you to ask what proprietary technology FaZe possesses.
The easy answer? Influencers, advertising deals, pro gamers, an unprecedented cultural permanence in the world of gaming, and touch with youth culture and the highly-online. However, the company has never turned a profit and that premium might eventually come back down to Earth if the company’s leadership can’t turn its ample clout into boko-bucks.
Meanwhile, the dozens of companies which took venture dollars are sitting on the sidelines–and they’ll be watching to see how investors treat FaZe. If the company’s stock continues to float, either because of optimism and interest in gaming and its cultural touch, it’s likely FaZe will be the first of many esports brands to test markets.
On the flip side, if FaZe’s hot phase doesn’t last, esports companies might think twice before trying the markets.