Earlier this week, FaZe Clan stock began trading on the NASDAQ under the ticker symbol ‘FAZE’ after a blockbuster $725 million SPAC merger.
FaZe Clan is an online media company, consisting primarily of esports competitors and content creators.
The history of FaZe Clan is quite peculiar.
FaZe originated in 2010 as little more than a group of friends playing the first-person shooter Call of Duty. Since then, Faze has morphed into a full-fledged content studio, talent management agency, and e-commerce business with a fan base of roughly 500 million—80% of them between the ages of 13 and 34—across various digital platforms. It’s also attracted high-profile investors, such as professional athletes, and has cemented partnerships with large brands like McDonalds, Nissan, and MoonPay. FaZe Clan plans to bring on more creators and help them grow their own community, an alternative to reliance on advertising revenue from existing social media brands.
“FaZe Clan will fund investments and we will create the product and we'll own a bigger piece of the upside. That's the future of the creator economy," said Lee Trink, CEO of Faze Clan.
The creator economy is a growing force in the markets. The global market size is estimated to be over $13 billion, according to Statista, and is primarily focused on a younger generation.
On the first day of trading, FaZe Clan fell -24%, although managed to gain back 4% during the after-hours trading session. While this may not be the ideal first day of trading, many other planned SPAC deals remain on hold or have been completely canceled altogether.
FaZe Clan is not the only company in the space attempting to capitalize on the proliferation of the creator economy.
X1 Esports and Entertainment Ltd.
Just two weeks ago, X1 Esports and Entertainment Ltd (CSE: XONE) , a gaming and media portfolio company, also made their trading debut on the Canadian Stock Exchange.
Soon after going public, X1 announced the acquisition of Tyrus Talent Management, a digital influencer management firm specializing in working with YouTube, TikTok, and Twitch content creators, brand ambassadors and brands across all social media channels.
Mark Elfenbein, CEO of X1 Esports, commented, “The addition of the Company [Tyrus] to our portfolio, will help to establish X1 as an advertising sales organization with access to some of the most sought-after content creators in the video games category.”
Although X1 Esports is smaller than FaZe in terms of market capitalization, both companies seem to have their sights set on the creator economy and have established multiple sales verticals in an attempt to connect brands with Gen Z audiences.
In addition, X1 Esports and Entertainment Ltd. plans to continue building upon its portfolio of gaming & media assets through a combination of organic growth and accretive M&A.
It will be interesting to see how both companies perform over the coming months as the growth of the creator economy continues to swell.
A Whirlwind of M&A and Investment in the Gaming Industry
Recently, there has been a whirlwind of M&A in the Gaming industry.
As of January 2022, Microsoft is set to acquire Activision Blizzard Inc. (NASDAQ:ATVI) for a jaw-dropping $68.7 billion, and Take-Two Interactive (NASDAQ:TTWO) is set to acquire Zynga (NASDAQ:ZNGA) for $12.7 billion, both currently marked down as the two biggest deals in Gaming history.
On the institutional side, more and more funds and investment firms are also getting on board with gaming and esports. For example, Vancouver-based Aquilini Group, which owns the well-known NHL team Vancouver Canucks, invested a large sum into Enthusiast Gaming (TSX:EGLX) a few years ago. The company has since grown into a large network of Esports and gaming companies and boasts a market cap of over $300 million.
Legal Disclaimer/Disclosure: While all information is believed to be reliable, it is not guaranteed by us to be accurate. Individuals should assume that all information contained in our article is not trustworthy unless verified by their own independent research. Also, because events and circumstances frequently do not occur as expected, there will likely be differences between any predictions and actual results. Always consult a licensed investment professional before making any investment decision. Be extremely careful, investing in securities carries a high degree of risk; you may likely lose some or all of the investment. Furthermore, it is certainly possible for errors or omissions to take place regarding the profiled company, in communications, writing and/or editing. Nothing in this publication should be considered as personalized financial advice. We are not licensed under any securities laws to address your particular financial situation. No communication by our employees to you should be deemed as personalized financial advice. Please consult a licensed financial advisor before making any investment decision. This is a paid advertisement and is neither an offer nor recommendation to buy or sell any security. We hold no investment licenses and are thus neither licensed nor qualified to provide investment advice. The content in this article is not provided to any individual with a view toward their individual circumstances. Baystreet.ca has been paid a fee of one thousand nine hundred dollars for X1 Esports and Entertainment Ltd advertising from X1 Esports and Entertainment Ltd. There may be 3rd parties who may have shares of X1 Esports and Entertainment Ltd and may liquidate their shares which could have a negative effect on the price of the stock. This compensation constitutes a conflict of interest as to our ability to remain objective in our communication regarding the profiled company. Because of this conflict, individuals are strongly encouraged to not use this article as the basis for any investment decision. By reading this communication, you agree to the terms of this disclaimer, including, but not limited to: releasing Baystreet.ca, its affiliates, assigns and successors from any and all liability, damages, and injury from the information contained in this communication. You further warrant that you are solely responsible for any financial outcome that may come from your investment decisions.
