Warrants Warrants

• Company Warrant's are securities issued by a company, usually during fresh offer of shares. The company issues warrants to raise capital/funds for itself. Warrants give investors an option to diversify their portfolio.
• Issued in the form of certificates, warrants give investors the right to buy shares in the company at a specific price at a future date. Companies generally offer warrants to attract investors.
• Warrant holders can convert their warrant certificates into underlying equity shares of the company within a given time period. Value of a warrant depends on the value of the ordinary share which is the underlying security
• When an investor exercises a warrant, they purchase stock, and the proceeds are a source of capital for the company. A warrant certificate is issued to the investor when they exercise a warrant. The certificate includes the terms of the warrant, such as the expiry date and the final day it can be exercised.
• However, the warrant does not represent immediate ownership of the stocks, only the right to purchase the company shares at a particular price in the future. Warrants are not extensively used in the United States, but they are more common in China.

• A Stock Warrant gives the holder the right to purchase a company's stock at a specific price and at a specific date. A stock warrant is issued directly by the company concerned; when an investor exercises a stock warrant, the shares that fulfill the obligation are not received from another investor but directly from the company

Key Differences

• A Stock Warrant differs from an option in two key ways: a company issues its own warrants, and the company issues new shares for the transaction. Additionally, a company may issue a stock warrant if they want to raise additional capital from a stock offering. If a company sells shares at $100 but a warrant is just $10, more investors will exercise the right of a warrant. These warrants are a source of future capital.
• Stock options are listed on exchanges. When stock options are exchanged, the company itself does not make any money from those transactions. Stock warrants can last for up to 15 years, whereas stock options typically exist for a month to two to three years.
• Therefore, for long-term investments, stock warrants may be a better investment than stock options because of their longer terms. However, stock options may be a better short-term investment.