FaZe Clan in serious trouble after failing to comply with Nasdaq listing rules

FaZe Clan in serious trouble after failing to comply with Nasdaq listing rules

8. April 2023 by Andrew Williams

Following a communication from the SEC this past Friday, FaZe Holdings announced receipt of a notice from the Nasdaq Stock Market Listing Qualifications Department informing it that it “does not meet the $1 minimum bid price required for continued listing on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2) based on the closing bid price of the Common Stock for the 30 consecutive business days preceding the date of the Letter.” Esports Bureau already echoed FaZe’s falling share price a few weeks ago.

FaZe Clan’s share price fell below $1 on Jan. 20 for the first time. While the stock recovered to a price of more than $1 in the following days, Feb. 8 marks the last day FaZe’s stock traded above $1. From the time of receiving the delisting notice, the company has 180 calendar days, (the period ends Sept. 19) to return to compliance. To regain compliance with Nasdaq, the closing bid price of the common stock “must equal or exceed $1.00 per share for a minimum of ten consecutive business days.”

This can occur at any time within the 180-day period. You may also be eligible for an extension of an additional 180 calendar day compliance period.

It is no secret that FaZe Clan is in dire straits. With the company’s annual results due out next week, its share price is unlikely to recover above $1, considering investors may not like the 2022 shortfall that FaZe will disclose. However, the delisting notice itself will be one of its minor headaches, as a reverse stock split would bring the company back into compliance with Nasdaq listing rules without fixing any of the company’s underlying problems. In this scenario, a 10:1 reverse stock split would mean that current shareholders would receive 1 share for every 10 shares they currently own, consequently increasing the stock price 10-fold and increasing FaZe’s stake in a safe range above $5 per share.

Tobias Seck, Business Analyst.