Skydance Ships Out 471 Million Warrants, and Shareholders Pay the Visible Price

Skydance Ships Out 471 Million Warrants, and Shareholders Pay the Visible Price

A 22% One-Day Slide After the Payout

Skydance Corp. (NYSE: SKYD) ended Wednesday down about 22.2%, closing at $7.05-$7.06 a share, after falling as much as 25% to 28.5% during the session. The intraday low near $6.68 briefly cut the company's market value to roughly $34 billion; The Motley Fool calculated that about $2.19 billion was wiped out at the bottom, around 11:40 a.m. ET. That is the second bruising stretch for a stock that only began trading Oct. 6 under the ticker SKYD.

One Share In, One Warrant Out

The trigger was a distribution, not fresh bad operating news. Per an SEC filing and the company's own release, Skydance issued 470,746,773 warrants on Oct. 13 as a dividend to Class B holders of record as of Oct. 5 — one warrant per share. Oct. 14 was the ex-dividend date, so buyers from Wednesday onward get no entitlement. Allocations flowed through the Depository Trust Company to participating brokers.

Twelve Dollars, Ten Years, With an Escape Hatch

Each warrant initially lets the holder buy one Class B share at $12.00, subject to customary anti-dilution adjustments, expiring Oct. 13, 2036 — a ten-year runway. After the third anniversary, Skydance can accelerate expiry if shares close at or above $30 on at least 20 of 30 consecutive trading days, with 20 to 45 trading days of notice. The Motley Fool notes the board can lower the strike price or increase the shares each warrant covers, but cannot raise the strike.

Warrants Now Trade on Their Own as SKYD WS

The warrants listed separately on the New York Stock Exchange as SKYD WS starting Oct. 13, with a reference price of $2.20, per Investing.com, which also reported a last print of about $2.39 on Wednesday. The NYSE disclosed a bookkeeping adjustment: the official Class B closing price was cut $0.19368, from about $9.27 to $9.07, reflecting the value carved out. The company puts total equity at roughly $46.6 billion before the warrants and $45.6 billion after.

The Ellisons and RedBird Sat It Out

The distribution deliberately skipped a defined set of insiders. Filings say Larry Ellison, David Ellison, Gerald J. Cardinale, the Lawrence J. Ellison Revocable Trust and RedBird Capital Partners Fund IV neither received nor may exercise the warrants. Of the 1,093,020,754 Class B shares outstanding as of Oct. 2, roughly 622 million were held by restricted holders, the Paramount Global 401(k) plan and the Master Trust — also excluded. In practice, the warrants went only to the public float.

The Company's Line: Same Terms as the Equity Syndicate

Skydance frames the warrants as putting legacy Paramount Skydance holders on comparable footing with insiders. Variety reports the warrants were meant to give PSKY shareholders the chance to buy in on "similar terms" to the $47 billion equity syndicate backing the Warner Bros. Discovery deal — priced at $12 a share — whose backers include David Ellison, Larry Ellison, RedBird's Gerry Cardinale, LionTree and the sovereign wealth funds of Saudi Arabia, Qatar and Abu Dhabi. Wells Fargo analysts led by Steven Cahall called the distribution "the final step" in closing the WBD transaction, while cautioning that prior media mergers (CBS-Viacom, Disney-21st Century Fox, Discovery-WarnerMedia) have not reliably hit their projected EBITDA targets.

Dilution Is the Real Overhang

The fear driving the selloff is share count. If all 470.7 million warrants are exercised at $12, Skydance would raise about $5.65 billion while taking Class B shares from about 1.093 billion to roughly 1.564 billion. The company's own warrant FAQ is blunt: if other holders exercise and you do not, your percentage ownership will be diluted. How many warrants have actually been exercised is not yet known.

A Technical Reset Wrapped in Bad Sentiment

Part of Wednesday's move is mechanical — the warrant's value separated from the share price, so the quote had to reset, a routine piece of plumbing after any distribution of value to holders. But the tape was ugly regardless: SKYD was already down 16% to 17% premarket, and the stock is off roughly 30% since listing. Deadline tied the broader media-stock weakness to a hotter-than-expected September inflation reading that raised rate concerns, a particular problem for heavily indebted companies.

Nearly $79 Billion of Net Debt Behind It

Leverage is the longer-term worry. Yahoo Finance and The Motley Fool report that Skydance disclosed pro forma net debt of $78.9 billion in its merger presentation, alongside $12.5 billion in exchange notes and roughly $14 billion of legacy debt restructured or retired. GuruFocus and Kalkine confirm the deal, first announced Feb. 27, 2026, closed Oct. 6 with WBD surviving as a wholly owned subsidiary; WBD holders received about $31.02 a share in cash and WBD stopped trading on Nasdaq the same day. SKYD's first session closed down about 2.7% at $9.51 and its second fell 6.8% to $8.98. Not everyone is bullish on the asset base: a report from Evan Shapiro cited by Business Insider values the company at only about $29 billion.

The Next Test Is the Earnings Call

Near term, the warrant supply caps the story: with SKYD well below the $12 strike, there is little reason to exercise, but the paper overhang keeps expectations of future share issuance alive. The checkpoints to watch are the company's November earnings report and post-merger cost cuts — TipRanks and Awful Announcing both flag possible job losses at CBS Sports and TNT Sports. For warrant holders the choice is narrow: hold and hope SKYD clears $12, sell the warrant for its roughly $2 of option value, or walk away. For everyone else, Wednesday's 22% drop was one part value separation and one part repricing of a debt-heavy media giant.