FaZe Holdings Inc FAZE shares are soaring Monday on post-IPO volatility following the company’s SPAC merger last week with B. Riley Principal 150 Merger Corp.
The move appears to be related to the high number of investors who opted to redeem shares during the merger process.
A total of 15,883,395 shares of BRPM class A common stock were redeemed for cash at a price of $10 per share, reducing the total float size by about 92%.
SPACs often have redemption rights, which give investors the right to sell their shares back to the acquisition company for net asset value if they don’t want to own the proposed company.
The redemption of SPAC shares reduces the amount of outstanding shares which also leads to a decline in the amount of shares available to short. Therefore, high redemption rates can often induce short squeezes.
FaZe Holdings shares are trading higher on above-average volume Monday. The stock was among the top trending tickers on Stocktwits at last check.
FaZe is a digital-native lifestyle and media platform rooted in gaming and youth culture.
FAZE Price Action: FaZe Holdings was halted for volatility shortly after the open on Monday.
The stock was up 35.1% at $12.94 at press time, according to data from Benzinga Pro.
Photo: Sam Churchill from Flickr.