Between SPACs and the EV industry, warrants seem to be a very common instrument for investmentsOther than the first indication about a company having a warrant to sell, how can one follow the instrument on any financial guides and also know what the warrant relates to regarding the dates the warrant expires or how much one warrant translates to when converted, or even how to convert the warrant? At least regarding preferred stock, there are some financial companies that track the instrument and even relate the movement of the stock to the movement of the preferred instrument. Any advice? For an example, Amprius Technologies, Inc (AMPX) has the stock, the warrant, (Amprius Technologies, Inc. WT (AMPX-WT)), trades on the NYSE, and also has options. I recently bought some options but that’s only because I couldn’t evaluate what the warrant would do for me. It seems to me, the warrant would be a better choice to follow because you are not constrained by the time factor. If you expect the company to take off based on earnings within the next 1/2 year, and you play the stock based on options, if the stock doesn’t move enough in that timeframe you might expire worthless. But if you buy the warrant, you would still own some rights to buy the stock after the 1/2 year… Ant advice on what to do and how to do it, and what financial supports can be researched to evaluate this type of investment?
thank you
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Warrants used to be a niche financial product, mostly used to sweeten the deal for investors who were wiling to finance junior mining or biotech companies, and that’s still true (and sometimes those warrants become publicly traded, though they’re also often private), but the SPAC revolution created a whole new gigantic class of warrants that dominate the conversation these days.
It’s true that warrants are much longer term (usually five years), so they’re more open-ended than options… but SPAC warrants also almost always have some ways of limiting your leverage and exposure if the stock happens to go bonkers –the most common provision is that usually the company has the right to force an early redemption or early exercise if the stock price is above $18 for a few weeks. They also require attention, since in many cases, if the company starts an early redemption, they can effectively buy back the warrants for a penny if you fail to take action when notified (usually through your broker).
Thanks to SPACs and the enthusiasm for warrants that the SPAC surge in 2020 and 2021 brought, a number of websites cropped up that track SPAC warrants — many of them offer free listings, like https://stockmarketmba.com/listofwarrantsfromformerspacs.php (though that particular one says it’s shutting down shortly and is no longer maintained). I’m not aware of any broader free financial websites that do a consistently good job tracking warrants, but perhaps others have noticed a good provider that they’d like to share?
I’m a sucker for warrants, in general, I love the long-term leverage — but they did get awfully expensive for a while, when they were popular. And so many SPACs have completely imploded that there’s probably a diamond or two in the rough there somewhere, if we’re lucky in our digging. I’ll let you know if I come across anything I really like.