What Happened To FaZe Clan? The eSports Org Stock Drops To All-Time Low Following Layoffs Of Staff

FaZe Clan, one of the most popular esports organizations in the world, has seen its stock price hit a new all-time low following news of layoffs at the company.

The term “lay off” was common in 2020. Ivy League companies, like many other companies, have experienced workforce reductions due to various reasons including the COVID-19 pandemic.

According to a report by the New York Times in October 2021, several Ivy League institutions, as well as Silicon Valley companies, had announced plans to lay off employees. For example, in August 2021, Harvard University announced it would lay off 168 employees due to financial challenges caused by the pandemic. Yale University announced a similar plan in September 2021, with around 215 employees affected.

Google in January 2023 became the latest technology firm to announce layoffs, releasing roughly 12,000 workers last week. The cuts represent just over 6% of parent-company Alphabet’s workforce, which numbered 186,000 as of September, according to a securities filing.

Well, it isn’t only Google and Ivy League companies, but in the world of eSports as well. The new year has not been all too kind to the esports industry. Juggernauts like 100 ThievesTeam Liquid, and OpTic Gaming are just a few of the most prominent brands letting dozens of employees go in the first few weeks of 2023.

Now, it appears FaZe Clan can be added to the list with perhaps the biggest reduction yet as the company has reportedly dropped “roughly 20% of its employees,” according to Business Insider.

The news hit the stock price of FaZe Holdings, which is listed on the NASDAQ exchange. The price of shares had already been tumbling since mid-2022. Here’s everything we know.

FaZe Clan ceo
FaZe Clan CEO Lee Trink (r)

FaZe Clan has reportedly laid off 20% of its overall workforce as the gaming and online entertainment brand continues to see its stock price plummet in 2023.

On February 17, it was reported by Business Insider that FaZe Clan was laying off around 20% of its staff, with an internal memo from CEO Lee Trink citing “uncertainty in the overall economy”.

The decision was made despite the company experiencing “incredible growth,” according to Trink, who stressed that “financial discipline” will be a greater focus of the organization moving forward.

Staff members have allegedly been let go at a gradual pace since December, 2022, with the full round of layoffs only just concluded in February, 2023. Workers were seemingly notified at an all-hands meeting earlier this week.

This significant drop appears to come as a result of FaZe Clan’s ongoing struggles as a publicly traded company. Since launching onto the stock market in July last year, the brand has seen a 93.10% reduction in value to date. With its stock price falling below $1, it now even risks being delisted.

“We have to be aware we’re operating in a very different economic environment today than we were even at the time we went public,” FaZe Clan CEO Lee Trink reportedly said in a company-wide statement obtained by Business Insider.

Originally, when launching as a public company, the goal was to raise “significantly more capital,” he explained. That funding was intended to focus on new opportunities, so FaZe allegedly hired around those possibilities before deals were signed and agreements were made. However, given the sheer decline in stock market value, the team has now “re-examed the breadth of [its] growth strategy in light of [the] current balance sheet.

“This re-focus, plus more uncertainty in the overall economy has led us to reducing our employee base.”

FaZe Clan members
FaZe earns a decent chunk of its revenue through partnerships with brands like Mcdonald’s.
FAZE CLAN X MCDONALD’S

Currently, an exact number of staff members laid off is unclear. However, both LinkedIn and RocketReach track more than 600 employees at the company, meaning up to 120 employees could have been impacted in the “roughly 20%” cuts reported by Business Insider.

Despite this staggering reduction amid the stock market plummet, Trink is still confident moving forward that revenue will continue “growing” for FaZe Clan.

“[We] expect to report revenue growth for 2022 will show an increase of over 25% from 2021.”

“While changes like this are always difficult, I’m confident that this new structure, accompanied by much greater focus on financial discipline and the holistic strategy we described at the all-hands meeting will put the company in the best position for us to capitalize on the many opportunities ahead.”

FaZe Clan members

FaZe Clan stock hits new all-time low.

At the close of trading on Thursday, February 16, FaZe Holdings sat at $0.68 per share. This is a far cry from the stock’s all-time high of over $20 – only six months ago.

FaZe stock had been trading below $1 in late January, although it did make a slight recovery at the beginning of February – staving off possible delisting risks by bouncing back over the $1 mark.

However, the latest hits with layoffs have seen the price tumble again, dropping below $0.70 for the first time at trading close.

The drop marks a 95% decline in the past six months.

But, while the outlook remains mired in uncertainty, FaZe will hope that the layoffs, plus whatever “financial discipline” is planned, will, eventually, put them on a path to profitability.

They still command an audience of millions of fans, many of whom would consider themselves loyal to the FaZe brand. But, the problem for FaZe, like most esports orgs, is monetizing these fans.

From FaZe’s YouTube channels, the average revenue per subscriber is only $0.36, according to Forbes, and much of this will be retained by the creators, rather than the organization.