Guild Esports, a prominent name in the competitive gaming world and backed by David Beckham, is currently navigating severe financial distress.
- The company has only £25,000 remaining in its accounts.
- Guild’s share price has dramatically dropped to ¼p, valuing the company at a mere £1.3 million.
- Since its IPO in 2020, the company’s shares have plummeted by 98%, having originally been valued at around £40 million.
- Despite the financial struggles, Guild is exploring options, including securing additional funding and potentially merging with a larger entity.
Guild Esports, which engages in video game tournaments for popular titles like Fortnite and Tekken, has issued a stark warning to its shareholders about its current financial predicament, announcing that it only has £25,000 left in its accounts. The financial deterioration has been severe, with the company’s shares hitting a record low of ¼p, reducing its market capitalization to just £1.3 million.
Since its initial public offering (IPO) in October 2020, Guild’s shares have experienced a dramatic decline of 98% from their original price of 8p, which had initially valued the company at approximately £40 million. The launch was initially seen as a significant indicator of investor interest in the esports sector, an industry where professional gamers compete for substantial prize money. However, despite the promising start, the company has lost £26.6 million over the span of three and a half years, while only generating a revenue of £14 million.
The company’s management is re-evaluating its strategic direction in light of these financial challenges. Guild has £1.4 million in outstanding bills due by the end of September, though it anticipates an income of £1.5 million in the coming months. In a recent stock exchange announcement, Guild stated: ‘The company is actively exploring a range of options to meet its short-term liabilities. These include securing additional funding, negotiating improved payment terms with creditors, and further cost reduction initiatives.’
Additional strategic considerations include possibly realising assets for cash or merging with a larger entity. David Beckham, an early investor who acquired shares at a discounted rate before Guild’s flotation, now holds a stake of just over 3%. Beckham’s investment, amounting to approximately £250,000, has significantly depreciated in value to less than £50,000.
However, Beckham has financially benefited from an influencer agreement with Guild, earning around £7.625 million from social media promotions and public appearances. Although he was initially guaranteed earnings of £15.25 million over five years, the terms were renegotiated two years ago so that Footwork Productions, Beckham’s image rights company, now takes a 20% cut of any sponsorship revenue and merchandise sales instead.
Guild Esports is actively seeking solutions to ensure its financial stability amidst significant challenges.
