FazE Holdings (NASDAQ: FAZE) shares are up 58% premarket. There’s no particular announcement nor news driving this so we must put it down to the vagaries of fashion. Or, as we usually describe that in financial markets, a speculative flurry or even a momentum trade. No real reason, just lots of people doing something because lots of people are doing something - exactly like fashion.
The business at FaZe: “FaZe Holdings Inc. operates lifestyle and media platform in gaming and youth culture. The company produces content, designs merchandise and consumer products, and creates advertising and sponsorship programs for brands reaching approximately 528 million fans across social platforms. It designs and sells merchandise, apparels, and consumer products under the FaZe brand, as well as through website, www.fazeclan.com. The company offers FaZe platform provides brands and advertisers with the ability to reach and engage with young and engaged audience base.” Reaching out to the kids on TikTok and the like. That’s not as dismissive as that sounds - it’s a huge market. But it is necessary to do well at it.
FaZe Holdings stock price from Google Finance
It’s that second part, doing well, which seems to be the FaZe problem. Looking at the accounts we get sales of $12 million in the latest quarter, that’s down 30%, and the loss on that is $14 million. Losing more than your revenues is not a good sign. Nor is shrinking sales. They’ve got cash for perhaps two quarters at those sorts of numbers.
FaZe is really not doing well. Really not well: “But with losses mounting and the shares tumbling, the company fired Trink, 55, on Sept. 9, replacing him on an interim basis with Chief Financial Officer Christoph Pachler. Interviews with seven former employees describe a mismanaged organization marked by poor spending decisions, excessive pay and expansion into unprofitable categories like esports. The company, which employed 112 people at year end, has been enmeshed in controversies involving its online personalities and announced two rounds of layoffs this year.”
That’s the problem with fashion - when you’re in you’re in and when you’re not, well, there’s not a great deal that can be done about it.
We put this current - very mild - revival down to just a momentum trade, a few decided to speculate in the stock.
