How the markets moved today
The S&P 500 (SNPINDEX:^GSPC) closed at 7,721, down 1.08%, while the Nasdaq Composite (NASDAQINDEX:^IXIC) finished at 26,693, down 1.88%. Among film, television, streaming, and media distribution peers, Walt Disney (NYSE:DIS) closed at $109.01, up 0.40%, and Comcast (NASDAQ:CMCSA) closed at $21.05, up 0.81%, highlighting mixed trading across large media names.
What this means for investors
Skydance shares slipped 24% today after the company issued 471 million warrants to former Paramount Skydance (formerly PSKY stock) Class B shareholders, granting them the option to buy new company shares. The warrant lets PSKY holders buy SKYD shares for $12 apiece, with an expiration date of 2036.
Since the warrants “detached” from SKYD stock’s share price today, Skydance shares adjusted downwards. Should all of these warrants be exercised, it would generate about $5.7 billion for Skydance but would increase its shares outstanding by roughly 10% — further explaining today’s market reaction.
The combined Skydance company is home to roughly $80 billion in net debt, versus an expected $11.2 billion in adjusted EBITDA, making this a highly leveraged bet for investors to consider. Trading with a forward EV/EBITDA around 10, SKYD stock isn’t outrageously cheap considering the risk.
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Josh Kohn-Lindquist has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Walt Disney. The Motley Fool recommends Comcast. The Motley Fool has a disclosure policy.
