Why FaZe Holdings Stock Got Smashed Again Today
There's risk to any investment, and that includes esports company FaZe Holdings (NASDAQ: FAZE). However, we're watching one of the company's risk factors play out in real time today. And as of 11:20 a.m. ET, FaZe stock was down a whopping 33% and down more than 50% in less than a week.
Yesterday, FaZe filed a Notice of Effectiveness with the Securities and Exchange Commission (SEC). The company came public already via a special purpose acquisition company (SPAC). But most of its shares weren't allowed to trade until the Notice of Effectiveness was filed. And it previously had a series of edits to make with its registration documents before it could make this happen.
SPAC stocks have interesting structures because insiders typically own the majority of the shares outstanding. That's the case for FaZe as well, and it gets a special mention in its registration filings. Under the section entitled "Risks Related to Our Securities," management notes that 76% of shares outstanding belong to "Selling Holders" -- private investors and insiders whose shares will now be able to trade.
Source Fool.com
