Skydance Corporation (NYSE: SKYD) stock fell sharply Wednesday as newly distributed warrants began trading separately, alongside a technical price adjustment following its acquisition of Warner Bros. Discovery Inc. (NASDAQ: WBD).

Skydance said the New York Stock Exchange adjusted the Oct. 13 official closing price of its Class B shares lower by $0.19368, from about $9.27 to roughly $9.07, ahead of the Oct. 14 ex-dividend date.

How The Warrant Adjustment Works

Skydance distributed 470,746,773 warrants to eligible Class B shareholders at a ratio of one warrant per eligible share.

Each warrant allows the holder to buy one Class B share for $12 and expires on Oct. 13, 2036, unless it expires earlier under the warrant agreement. The warrants trade separately on the NYSE under SKYD WS.

Once the warrants began trading independently, the warrant entitlement was no longer attached to the common shares.

Skydance said the NYSE based its adjustment on the warrants' $2.20 Oct. 13 closing price and the proportion of eligible shares relative to the company's fully diluted share count.

That means part of Wednesday's apparent decline reflects the warrant separation rather than an equivalent deterioration in Skydance's underlying business.

Post-Merger Pressure

Skydance completed its Warner Bros. Discovery acquisition on Oct. 6, creating a media company spanning film, streaming, news and sports.

The combined company now faces the task of integrating the businesses while reducing leverage. Skydance targets at least $6 billion in run-rate synergies within three years and net leverage of 3.0 times by the end of 2029.

The company also expects more than $10 billion in free cash flow by 2030.

Analysts have since lowered their valuation expectations. Barclays maintained an Underweight rating and cut its price target to $7 from $8 on Oct. 7, while StoneX maintained Buy but lowered its target to $11 from $16.

SKYD Stock Price Activity: Skydance shares were down 24.30% at $7.01 at the time of publication on Wednesday, according to market data.