FaZe Clan Prepares for Reverse Stock Split to Regain Nasdaq Compliance

Credit: FaZe Holdings

FaZe Clan is seeking approval from its stockholders to consolidate the number of its existing shares in order to regain compliance with Nasdaq listing rules. A filing published Friday by the U.S. Securities and Exchange Commission (SEC), revealed that FaZe Clan’s Chairman of the Board, Daniel Shribman, will invite the company’s stockholders to the 2023 annual shareholders meeting held on June 13 on March 1.

The invitation outlines three agenda points, on which FaZe Clan’s stockholders will be asked to vote: the re-election of two members of FaZe Clan’s board of directors, the appointment of an independent accounting firm for 2023, and the approval of a reverse stock split.

Esports and lifestyle organization FaZe Clan received a letter from the Listing Qualifications Department of the Nasdaq Stock Market on March 23, as the company fell out of compliance with Nasdaq’s $1.00 minimum bid price requirement. FaZe Clan was given until September 19 to regain compliance. To achieve this, FaZe Clan shares must close at $1.00 or higher for at least 10 consecutive trading days.

The proposed reverse stock split would allow FaZe Clan to regain compliance with the $1.00 minimum bid rule, as the board of directors suggested a reverse stock split at a 20:1 or 30:1 ratio. If approved by stockholders, such a consolidation of FaZe shares would result in per-share prices jumping to around $11 or $17 at the stock’s current market price. While a reverse stock split results in an increase in share pricing, it does not affect the company’s market capitalization or address any of the underlying business practices issues that caused the company to lose value in the first place.

The other agenda points stockholders will be asked to vote on include the approval to appoint New York-based accounting and advisory firm “Marcum LLP as [FaZe Clan’s] independent registered public accounting firm for the fiscal year ending December 31, 2023,” and the re-election of Mickie Rosen and Ross Levinsohn (The Arena Group CEO and Chairman) as members of the board of directors until FaZe’s 2026 annual shareholders meeting.

Amid speculation about FaZe Clan planning to go private, the company’s latest SEC filing discloses its first official statement on the matter: “Notwithstanding the decrease in the number of outstanding shares following the proposed Reverse Stock Split, our Board of Directors does not intend for this transaction to be the first step in a ‘going private transaction.’”