FAZE Stock Stumbles After Messy FaZe Clan SPAC Debut

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  • FaZe Clan (FAZE) stock is sinking for a second straight day.
  • The company began trading on the Nasdaq yesterday after merging with a SPAC.
  • There are different views on the reasons for the shares’ early struggles.
FAZE stock - FAZE Stock Stumbles After Messy FaZe Clan SPAC Debut

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The shares of FaZe Clan (NASDAQ:FAZE) are falling for a second straight day. FAZE stock debuted on the Nasdaq yesterday after merging with a apecial-purpose acquisition company (SPAC). FaZe Clan is a gaming and lifestyle brand that caters to Gen Z consumers and other young people.

FAZE stock tumbled almost 25% yesterday and is declining another 7% in morning trading today. After starting out as a YouTube channel that featured video-game stunts, FaZe has since become “a media empire that includes content creators and professional gamers that entertain millions of fans on social media, video, and streaming sites,” Barron’s reported.

Forbes has named FaZe as “the fourth-most-valuable esports company.”

FAZE Stock: Different Views on the Poor Launch

SPACs and the companies that merge with them are largely being shunned by investors now after they were extremely popular in 2020 and 2021. Among the reasons for the change are the fact that many of the companies that merged with SPACs have performed quite poorly, while U.S. regulators are looking to more tightly regulate SPACs.

In general, conventional initial public offerings (IPOs) have also struggled mightily this year.

Some pundits and analysts are blaming FaZe’s weak launch on the struggling SPAC and IPO markets. Others, however, are contending that Gen Z consumers cannot generate strong profits for companies and investors.

As an example of the latter point of view, consider the points recently raised by a Seeking Alpha contributor known as “Another Mountain’s Rock Investing.” The columnist recently noted that the revenue from esports tournaments has been lackluster. And the industry’s financial performance is: “unpredictable, risky, and variable.”

Consequently, FaZe must rely on advertising to boost its financial results, and advertising has limited upside and is quite risky, warned the columnist. The Seeking Alpha contributor has a “neutral” rating on FAZE stock. They believe that it is: “far too soon to determine the financial capabilities of FaZe.”

On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.


Article printed from InvestorPlace Media, https://investorplace.com/2022/07/faze-stock-stumbles-after-messy-faze-clan-spac-debut/.

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