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What conversion terms and triggers apply to Opendoor warrants and how do they affect ownership percentage?
Executive summary
Opendoor issued three tradable warrant series — Series K ($9 exercise), Series A ($13) and Series Z ($17) — at a ratio of one of each warrant for every 30 shares held as of the Nov. 18, 2025 record date; warrants were distributed on or about Nov. 21, 2025 and expire Nov. 20, 2026 unless early‑expired by performance triggers (exercise and VWAP triggers cited) [1] [2] [3]. The warrants are exercisable for cash (with the company able to convert to net‑exercise in the warrant agreement) and will only create new common shares if and when holders exercise, so dilution — and any change in ownership percentage — depends on who exercises and whether the company uses net exercise versus cash settlement [1] [3] [4].
1. What each warrant series does and basic mechanics
Opendoor granted three separate warrants per 30 shares owned: Series K permits purchase of one share at $9.00, Series A at $13.00 and Series Z at $17.00; each warrant is exercisable on or after the distribution date and expires November 20, 2026 unless early‑expired under specified conditions [2] [1]. The warrants are exercisable for cash in the ordinary course, but the warrant agreement gives Opendoor the contractual ability to change the exercise method to a net exercise (which would result in share issuance net of cash rather than the company receiving full cash proceeds) [1].
2. Early‑expiration trigger and its practical effect
Multiple reports note an early‑expiration mechanism tied to Opendoor’s stock trading performance: a 30‑day VWAP trigger set at 120% of each series’ exercise price (i.e., roughly $10.80 for Series K, $15.60 for Series A, $20.40 for Series Z) would cause warrants to expire early if satisfied, according to market writeups that cite the warrant terms [3]. If those VWAP triggers are met, warrant holders would lose the right to exercise, so fewer or no additional shares would be issued from those warrants — a cap on potential dilution if the share price runs up enough to trip the trigger [3].
3. How exercise vs. net‑exercise changes ownership dilution
If holders pay cash to exercise, Opendoor issues new common shares and receives cash proceeds equal to exercise price × exercised warrants; that increases the company’s share count and dilutes existing holders proportionally to who exercises [1] [4]. If Opendoor elects net exercise as permitted, the company would issue a smaller number of shares in lieu of cash (holder surrenders warrants and receives fewer shares based on value), which reduces cash inflow and typically results in smaller share count increase than full cash exercise — affecting dilution and ownership percentages less than full cash exercises would [1].
4. Who received warrants (and note on convertible noteholders)
Warrants were distributed to registered common stockholders of record on Nov. 18, 2025 at the ratio above, rounded down to whole warrants; holders of certain convertible notes as of the record date also received warrants on the same terms, using applicable conversion ratios to determine the number of warrants they received [1] [5]. That means both retail holders and some fixed‑income stakeholders could trigger dilution if they exercise their warrants [5] [6].
5. Magnitude of potential dilution — what reporting says (and limits of available data)
Available sources confirm the per‑share issuance mechanics and the 1:30 distribution ratio but do not provide a full pro forma share‑count after hypothetical exercise that would let us compute exact ownership percentage shifts for specific holders (available sources do not mention a company‑wide pro forma dilution table in the cited releases) [1] [2]. Analysts note that warrants do not change current share count until exercised; therefore immediate dilution is nil, and future dilution depends wholly on exercise behavior and any net‑exercise election by Opendoor [4].
6. Incentives, narratives and potential conflicts
Opendoor framed the dividend as “shareholder‑first” upside and management alignment; CEO commentary and filings present the warrants as a performance‑tied benefit to shareholders [7]. Outside commentary (e.g., Motley Fool) frames the move as a device that can boost the stock and complicate short sellers, so motivations can be read both as genuine shareholder alignment and as tactical market engineering — both views are present in coverage [8].
7. What to watch next (practical checklist for owners concerned about ownership %)
- Monitor whether and when each VWAP 30‑day early‑expiration trigger is met [3].
- Track any Form 8‑K or SEC disclosures describing the company’s election of net exercise versus cash exercise [1].
- Watch trading or filings showing how many warrants are exercised (or cancelled) before Nov. 20, 2026 to update pro forma share count; current reporting filed with the SEC includes the warrant agreement but not a final post‑exercise cap table [1] [9].
Limitations: reporting contains the warrant terms, distribution ratio and expiration/trigger mechanics, but available sources do not provide a company‑level pro forma showing exact dilution scenarios or a day‑by‑day log of exercises to compute precise ownership percentage changes [1] [3].