Special study · Market crashes
A warrant is a right to buy a company's stock later at a set price. Used once, it can help a small company raise money. Used again and again, with prices reset lower each time, it is a pattern worth knowing before you buy.
First two figures: The count, computed from each company’s own SEC filings, public float at the earliest and latest year on record, 2010–2026; corrected October 11, 2026. Companies that went bankrupt or stopped filing are not counted, so the losses shown are likely understated.
By the 1920s stock purchase warrants were a common part of U.S. financings: a 1926 Safeway preferred-stock offering carried warrants to buy common stock, and a June 1928 $5 million gold debenture came with stock purchase warrants. By 1929 a law review was analyzing “Convertible Securities and Stock Purchase Warrants” as an established instrument. We have not found the first U.S. issue; if you know it, tell us.
1935 — after the layered holding-company finance of the 1910s and 1920s, Congress passed the Public Utility Holding Company Act.
1951 — utility warrants were still in the courts: the U.S. Supreme Court decided Niagara Hudson Power Corp. v. Leventritt, 340 U.S. 336, about stock option warrants.
The 1990s “floorless” convertibles. Privately placed convertibles that convert at a discount to the market price, so the lower the stock goes, the more shares the holder gets (the SEC’s investor guide lists the street names: “floorless,” “toxic,” “death spiral,” “ratchet”). A study of all 487 such issues announced before August 1998 found a buyer of the issuer’s stock lost on average 34% in a year, and the one-year return was negative in 85% of cases, during one of the strongest bull markets in U.S. history.
The 2020–2021 SPAC boom. SPAC units are typically sold as a share plus a warrant. SPAC IPOs rose from 248 in 2020 to 613 in 2021. Then the wave broke: completed SPAC mergers fell from 50 in the fourth quarter of 2021 to 16 in the first quarter of 2022, with high redemptions and weak share prices after the mergers cited among the reasons.
What that shows, and does not. Warrant-heavy financing has tended to arrive in speculative markets, and the companies most dependent on it have tended to lose value. That is a pattern of timing. It does not by itself prove warrants cause crashes.
Our hypothesis, not a finding: the heaviest users of warrant paper tend to end up as dead companies, after a last burst of financing that lets insiders and financiers cash out, and waves of this paper build before markets fall.
The test we are building: (1) every company with heavy warrant terms that later stopped filing, was delisted or went bankrupt; the financings it filed in its last two years; and who was on the other side of them. (2) heavy-warrant filings counted month by month against market highs and falls. We will publish the method and the result, whichever way it comes out.
“People lose money in the market because they are often not given all the facts.” — Mark Nejmeh, Warrant Wire
Every one of these is in the company’s own SEC filings. Search a company and read them before you trade.
Nothing here is investment advice, nothing here is a recommendation to buy or sell any security, and nothing here says any company or person broke any law.
Built 2026-10-11 · warrant-history-1a