Skydance shares slide 22% as warrants start trading in rough market

Skydance shares slid 22% on Wednesday, 14 October to just over $7 as new stock warrants started trading separately.

The drop came on the day the warrants split off from the shares. A warrant is a paper that gives the holder the right to buy a share later at a set price. Skydance handed out one warrant to buy one Class B common share for each share held by public stockholders on the 5 October record date, according to Deadline.

The company issued about 471 million warrants in total. They went to holders of about 9% of its common stock. They began trading on the New York Stock Exchange on Wednesday under the symbol SKYD.WS and closed at $2.20.

About 90% of the investor base did not receive the warrants. That group includes Larry Ellison, RedBird Capital and Middle East sovereign wealth funds.

The sale followed the close of the Paramount-Warner Bros. Discovery merger on 6 October. The combined company now trades under the new symbol SKYD and carries a debt load of nearly $80 billion.

What makes this stand out is the mechanics. When warrants trade separately, the share price often resets to reflect the value that has moved into the new security. The fall was sharp even by that standard.

It was also a rough day across the market. US annual inflation accelerated to 3.7% in September, according to the Bureau of Labor Statistics Consumer Price Index. Gas prices surged 34% year over year in September. Hotter than expected inflation data sent Wall Street stocks tumbling, according to Reuters.

The Nasdaq fell 1.9%. The Russell 2000 fell 1.9%. The S&P 500 shed 1.1%. The Dow Jones Industrial Average lost about 50 points.

Media and tech stocks largely followed. Meta fell 3.3%. Amazon fell 1.7%. Alphabet fell 1.7%. Snap fell 6%. Spotify fell 0.6%. Oracle fell about 9% and is now down 33% year to date.

Netflix was a rare gainer. Shares ended Wednesday up 0.16% even after the company unveiled job cuts earlier in the day.

Apple also rose. Shares closed up 0.5% on Wednesday at $343. The stock is up 26% year to date and nearly 40% over the past 12 months.

Apple changed chief executive on 1 September, when John Ternus took over from Tim Cook. It recently unveiled the foldable iPhone Duo. Apple and Nvidia are the only two companies ever to reach the $5 trillion market capitalisation mark.