FaZe Clan’s shares on the NASDAQ have fallen to their lowest point yet, following the company’s latest SEC filing, and turbulent times in the wider market.
Going public in July, FaZe become the first esports organization to be listed on the NASDAQ.
Things got off to a rocky start immediately, with the share price dropping from $13.02 to $9.58 in a matter of days. However, the stock rallied after, reaching a peak of just over $20 in early August.
Since that peak, however, it has been two months of volatility, and following the company’s S1 filing on September 26, the stock price has dropped to $9.12 — the lowest since the SPAC merger in July.
Why has FaZe Clan stock dropped?
This decline marks a 30% drop in a matter of days, so clearly, something has caused this rapid revalue of FaZe shares.
On September 26, FaZe Holdings filed an S1 form to the SEC, outlining their intent to issue new shares, as well as conduct a period of insider sales.
In total, FaZe plans to issue 5.9 million new shares, as well as insider sales of up to 64 million. Put simply, all these new shares in the market is likely to reduce the cost of each share, as there are more available.
VentureBeat also analyzed the filing, explaining that “$71.4 million of its $100 million backstop commitments defaulted on their obligations.” A backstop is essentially an insurance policy that if a company’s new shares are not sold, they will then be purchased by the guarantor, typically an investment bank.
With $71.4m of FaZe’s $100m backstop now unaccounted for, B. Riley Financial, who were behind the SPAC merger with FaZe originally, will now invest a further $53.4 million into FaZe to make up the difference.
All of this, as well as the NASDAQ composite index itself falling almost 10% this month, means FaZe stock has reached a new low. But it’s still early days for the esports organization on the public market.