Guild Esports, the David Beckham-backed gaming group, is teetering on the brink of collapse less than four years after its high-profile listing on the London Stock Exchange.
The company, which competes in video game tournaments for titles like Fortnite and Tekken, has warned shareholders of its dire financial straits, with only £25,000 left in its accounts.
On Thursday, Guild’s share price plummeted to a record low of ¼p, slashing the company’s market value to a mere £1.3 million. Since its initial public offering (IPO) in October 2020, Guild’s shares have depreciated by 98%, a stark contrast to its launch price of 8p, which had initially valued the company at around £40 million.
Guild’s foray into the stock market was initially seen as a litmus test for the City’s interest in the burgeoning esports sector, where professional gamers compete for substantial prize money. However, the company has struggled to win over investors, incurring losses of £26.6 million over three and a half years while generating only £14 million in revenue.
The company’s management has been reassessing its strategic direction and published their preliminary findings this week. With £1.4 million in outstanding bills due by the end of September, Guild’s financial outlook remains precarious despite an anticipated 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.”
Furthermore, the board is contemplating broader strategic shifts, which may involve realising assets for cash or potentially merging with a larger entity.
David Beckham, who was an early investor and acquired shares at a discounted rate prior to Guild’s flotation, holds a stake of just over 3%. Despite having invested approximately £250,000, the value of his shares has dwindled to less than £50,000. Nevertheless, Beckham has profited significantly from an influencer agreement with Guild, earning around £7.625 million so far from social media promotions and public appearances.
Originally, Beckham was guaranteed earnings of £15.25 million over five years from this agreement. However, two years ago, the terms were renegotiated so that Footwork Productions, Beckham’s image rights company, now takes a 20% cut of any sponsorship revenue and merchandise sales instead.
