FaZe Clan risks being delisted as stock price continues to fall below $1
FaZe Clan now has to deal with concerns about a deficiency notice from the Nasdaq stock exchange as the org’s share price remains below $1, with potential delisting on the horizon if things don’t turn around.
FaZe went public on the Nasdaq in 2022 through a SPAC merger, kicking off with a $1 billion valuation.
Their start to life as a public company was promising, reaching a peak of $20 per share in August, but since then the value has plummeted, sitting at $0.89 per share at the time of writing.
There are myriad reasons for this sharp decline, including promised investment defaulting and concerns about cash-on-hand to cover expenses beyond the current financial year, as reported by Forbes.
But as the stock continues to trade below $1, there is an even greater concern. Nasdaq compliance requires listings to trade at a value greater than $1 per share, and any company below this for 30 consecutive days risks a deficiency notice.
As Nasdaq outlines, “If a company trades for 30 consecutive business days below the $1.00 minimum closing bid price requirement, Nasdaq will send a deficiency notice to the company, advising that it has been afforded a ‘compliance period’ of 180 calendar days to regain compliance with the applicable requirements.
In order to regain compliance, the listing would need to maintain “a closing bid price of $1.00 or more for 10 consecutive business days.”
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FaZe stock ($FAZE) fell below $1 at close on January 20. It has done so again on January 23 and 24.
“If a company is unable to resolve its bid price deficiency during the applicable compliance period, Nasdaq Staff will issue a delisting letter,” Nasdaq stipulates. At this point, the company can request a hearing, which will pause the delisting, in order to make an appeal to the exchange.
FaZe will want to avoid any such compliance issues in the first place, though, which requires the stock price to make a quick turnaround. But this coincides with the end of the six-month ‘lock-up’ on FaZe staff and creators holding shares, agreed as part of the SPAC deal, meaning they can now choose to divest, which could impact the stock price further.
As tech and gaming companies elsewhere continue layoffs, and investment into esports orgs dries up, there are many headwinds to face, even for one the biggest brands in the business, valued in 2022 at $400 million by Forbes.