Skydance shares closed down 22% on Wednesday to end the session at just over $7 after the company distributed warrants to investors. Apple shares rose, but tech stocks and broader markets ended in the red after a worse-than-expected inflation reading in September sparked fears of higher interest rates that hit heavily indebted companies particularly hard.
Apple saw its market capitalization once again cross the $5 billion mark, a level it first reached last July. The stock is up 26% year to date and nearly 40% over the past 12 months. It closed up 0.5% today at $343. New CEO John Ternus took over as CEO from Tim Cook on September 1, and investors are bullish on the tech giant, which recently unveiled the foldable iPhone Duo. Apple and Nvidia are the only two companies to have reached the $5 trillion mark.
Other tech companies, like Meta (-3.3%), Amazon and Alphabet (both down 1.7%), which are investing heavily in AI, to Snap (-6%) and Spotify (-0.6%) have taken the opposite path. Netflix shares drifted downward but ended the session up a hair (+0.16%). The streamer revealed significant job cuts earlier Wednesday.
In the latest step in its giant media merger, Skydance distributed one warrant to purchase one share of Class B common stock for each share held by a public shareholder as of the Oct. 5 record date. The company announced today after market close that it has issued a total of approximately 471 million warrants to holders of approximately 9% of its common stock. The warrants began trading on the New York Stock Exchange today (separately from the stock) under the symbol SKYD.WS with an official closing price of $2.20.
The company announced last week, before the closing of the Paramount-Warner Bros. merger. Discovery on October 6, that it would allow public investors access to the warrants. About 90% of the company’s investors, including Larry Ellison, Oracle billionaire and father of Skydance CEO David Ellison, as well as RedBird Capital, Middle Eastern sovereign wealth funds and other backers, did not receive warrants.
Oracle shares fell about 9% amid a broader slowdown in shares of major AI players. Since the start of the year, Oracle stock is down 33%.
The merged companies and renamed Paramount and Warner Bros. Discovery got off to a rocky start when it began trading under its new symbol, SKYD. The combined company has a massive debt of almost $80 billion. Rising interest rates may make debt more difficult to manage, and Wall Streeters are wary of Skydance’s high debt load and its ability to find the promised $6 billion in cost synergies.
Investors will be looking for strategic clarity from Skydance, Netflix and others as quarterly earnings season begins next week.
Annual inflation in the United States accelerated to 3.7% in September, according to the latest consumer price index from the U.S. Bureau of Labor Statistics. That figure was higher than expected as energy prices continued to rise, driven higher by the Trump administration’s war on Iran. Gas prices jumped 34% year-on-year.
Rising inflation is pushing the Federal Reserve to raise interest rates again after a hike in September.
The Nasdaq market fell 1.9%, the Russell 2000 fell 1.9% and the S&P 500 fell 1.1%. The Dow Jones Industrial Average lost about 50 points. Everyone ended the day at their lowest.
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