2023 has seen a wave of financial issues sweep across the esports industry, resulting in layoffs, downsizing, and sponsor losses for numerous organizations, including Cloud9, TSM, The Guard, 100 Thieves, and OpTic. This “market correction” has also hit three major Counter-Strike organizations, all grappling with the consequences of being publicly listed.
FaZe, a prime example, went public on the NASDAQ stock exchange in July 2022 after merging with a special purpose acquisition company (SPAC), which inflated its stock market value to $725 million. However, its stock price nosedived from $20.08 in August 2022 to an all-time low of $0.40 on March 20, 2023. FaZe is now considering going private, but this requires an estimated $40 to $60 million, while the organization recently reported a $50 million loss.
Astralis, another organization facing financial struggles, is also considering delisting. The company’s board of directors initiated a strategic review on March 30 to evaluate possible options, including merging, issuing new shares, selling some or all company shares/assets, or a combination of these. Despite their shares trading at a significant discount, Astralis still anticipates a net revenue of $12.4 to $13.2 million for the upcoming year.
Heroic’s board recently decided to issue new shares to secure enough funds for the organization to continue operations until summer 2023. After an initial public offering (IPO) valuation of $1.85, their stocks are now worth only $0.075. However, the company managed to raise $938,420, which is enough to keep them afloat through the summer.
The financial troubles of FaZe, Astralis, and Heroic reflect broader issues in the esports industry. As organizations face a lack of venture capital, reduced sponsorships, and failed naming rights deals with crypto brands, they must find ways to navigate this challenging economic landscape.
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