Skydance Corp. Shares Drop After Warrant Distribution

Skydance Corp. experienced a significant decline in shares on Wednesday, following the distribution of nearly 471 million stock warrants to its shareholders.

During trading, Skydance’s stocks plummeted by as much as 26%, reaching $6.68 per share around 11:35 a.m. ET. By the end of the day, the stock managed to recover slightly, closing down 22.2% at $7.06 a share.

The company issued approximately 470.7 million warrants on October 13, after completing its acquisition of Warner Bros. Discovery, as detailed in a filing with the Securities and Exchange Commission (SEC).

These warrants provide investors the option to purchase shares at a predetermined price before they expire.

Eligible shareholders, those who held Skydance Class B common stock as of October 5, received one warrant for each share. Each warrant allows the purchase of one Skydance Class B share for $12.

If all warrants are exercised, Skydance could potentially raise around $5.7 billion. They are set to expire in October 2036, although they may end sooner under certain conditions.

This distribution of warrants followed the completion of Skydance’s $110 billion takeover of Warner Bros. Discovery, consolidating brands such as CBS, CNN, Paramount+, and HBO Max under its umbrella.

The newly combined entity started trading on the New York Stock Exchange under the ticker “SKYD.” Wells Fargo analysts noted that this warrant distribution marked the finalization of the Warner Bros. Discovery transaction.

CEO David Ellison indicated that the merger would position Skydance to compete more effectively against major streaming and technology players like Netflix and Amazon. They aim to combine HBO Max and Paramount+ into a single streaming platform, targeting around $6 billion in savings.

Additionally, reports suggest that the new company is likely to carry close to $80 billion in debt.

Skydance has yet to make a public comment regarding the situation.