Skydance Stock Down 22% After Warrants Issued to Paramount Investors

Key Points:

• Shares of Skydance Corp., formed by the merger of Paramount and Warner Bros. Discovery, dropped as much as 27% after issuing 471 million warrants allowing Paramount Skydance PSKY Class B shareholders to buy stock at $12 per share, diluting ownership and raising potential capital.
• Skydance’s stock closed down 22.2% at $7.06 per share on the NYSE, with the company’s market capitalization falling from a pre-warrant $46.6 billion to about $35.6 billion following the price adjustment and stock decline.
• The warrants provide PSKY shareholders terms similar to those given to major investors in the $47 billion equity syndicate backing the Warner Bros. Discovery deal, including prominent figures and sovereign wealth funds, all priced at $12 per share.
• Despite nearly $70 billion in pro-forma annual revenue, Wall Street remains cautious due to Skydance’s nearly $80 billion net debt and historical challenges with media mergers delivering expected EBITDA, leading Wells Fargo to maintain an "underweight" rating with a $7 price target.
• The $111 billion Paramount-WBD deal unites major studios, TV networks, and streaming services like Paramount+ and HBO Max, aiming for $6 billion in cost synergies amid concerns over integration risks and evolving media fundamentals.