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Are Opendoor warrants cash-settled, equity-settled, or net-share settled and how does that change shareholder percentages?
Executive summary
Opendoor distributed three tradable warrant series (K, A, Z) as a special dividend on Nov. 21, 2025; each warrant is exercisable for one share at $9, $13 and $17 respectively and is exercisable for cash, though the company’s warrant agreement allows Opendoor to elect net exercise instead of cash settlement [1] [2] [3]. Available sources state the warrants are initially cash‑exercisable but expressly permit the company to switch to a net‑exercise method, which changes how shareholder percentages and dilution would play out if the company elects that route [1] [2] [4].
1. What the company announced: three cash‑exercisable warrant series
Opendoor announced a special dividend of three warrant series — one Series K, one Series A and one Series Z for every 30 shares held at the record date — with exercise prices of $9, $13 and $17 and expirations around Nov. 20, 2026; press releases and filings state the warrants “are exercisable for cash on and following the Distribution Date” [1] [3] [5].
2. The critical caveat: company may change to net exercise
Opendoor’s public communications and the warrant agreement (filed as an exhibit to the Form 8‑A) explicitly say exercise is “in accordance with the terms of the warrant agreement, subject to the Company’s ability to change the exercise method to net exercise as provided in the warrant agreement” — meaning cash exercise is the baseline but the company can elect a net‑settlement mechanism later [1] [4].
3. Plain English: cash‑settled vs. net‑share settled — what each means for dilution
If warrant holders pay cash at exercise, the company issues one new share per exercised warrant (cash‑settled to issuer means company receives cash and issues equity), which increases the total share count and dilutes existing shareholders proportionately. If Opendoor elects net exercise (net‑share settlement), instead of receiving cash and issuing a full share, the company delivers a smaller number of shares equal in value to the intrinsic amount; this issues fewer shares than a full‑share issuance and therefore produces less dilution per exercised warrant [1] [2]. Available sources do not present a formal formula from Opendoor’s warrant agreement in these materials, only that net exercise is an available exercise method [1].
4. Immediate practical effect on shareholder percentages (using disclosed ratios)
Opendoor distributed one warrant of each series for every 30 shares held, so if every eligible warrant were exercised for full shares via cash exercise, the shareholder register would expand by an amount equal to the number of warrants exercised (one new share per exercised warrant). That would reduce every existing shareholder’s percentage ownership because the denominator (total shares outstanding) increases. Specific percentage change depends on how many warrants are exercised; available sources do not include a company‑provided projection of fully diluted share count or an exact post‑exercise ownership table (not found in current reporting) [1] [3].
5. How net exercise changes that math and company motives
Net exercise reduces share issuance per exercise because the company settles in shares equivalent to the warrant’s intrinsic value rather than issuing a full share against cash. That means less dilution to remaining shareholders compared with full cash‑for‑share exercise. Opendoor’s explicit right to elect net exercise gives management a tool to moderate dilution while keeping the economic result of exercise for warrant holders; the filings and press releases frame the dividend as “shareholder‑first” alignment, which suggests a motive to balance rewarding holders without excessive dilution [1] [6].
6. Market implications and investor perspectives
Market writers and analysts flagged both the potential reward to long‑term holders if the stock clears the strike prices and the dilution risk if many warrants are exercised; some commentary framed the package as a way to pressure shorts and incentivize holders, while noting dilution concerns if cash exercise is used broadly [7] [8] [9]. Stock‑market notices and broker memos confirm the warrants will trade on Nasdaq and that clearing/settlement logistics (NSCC/OCC flow) will be handled in typical exchange channels [10] [11].
7. Limitations of current reporting and what to watch next
Company filings state the mechanism but do not, in the publicly cited summaries here, provide a worked example of post‑exercise share counts under cash versus net exercise — nor do they say whether Opendoor intends to elect net exercise (not found in current reporting) [1]. Investors should watch Opendoor’s warrant agreement exhibit to the Form 8‑A for the exact net‑settlement formula and any subsequent company notice about exercise method, and monitor filings that disclose updated share counts or a prospectus supplement if issued [1] [4].
Bottom line: the warrants were issued as cash‑exercisable by default, but the company reserved the right to switch to net exercise; cash exercise causes straightforward new‑share dilution, while net exercise produces less share issuance and therefore less dilution — exact impacts depend on actual exercise behavior and any election Opendoor makes under the warrant agreement [1] [2] [4].