What are 'Piggyback Warrants'

Piggyback warrants are typically acquired following the exercising of another warrant. Piggyback warrants are a type of sweetener and can prompt additional investment in a company. 

Breaking Down 'Piggyback Warrants'

Piggyback warrants come into effect when another warrant is exercised. This acts as a sweetener to an investor because once they exercise the original warrant, the piggyback warrants give them the opportunity to acquire even more shares at a fixed price if the company continues to do well (share price rises). 


A warrant is a type of security issued by a company that gives the holder the right, but not the obligation, to buy shares from the company at a specified price within a specified time period.

Warrants can be bought or sold, with their value fluctuating as the underlying share price fluctuates. Once the underlying share price moves above the exercise price of the warrant, holders may be enticed to exercise that option and buy the shares at the exercise price. For example, if a company issues $9 warrants, and a year later their stock is trading at $10, investors can exercise the warrant to buy stock at $9 even though the stock is currently trading at $10.

This is possible because when a warrant is exercised the company is issuing new shares. Therefore, warrants are dilutive in nature, increasing the number of shares outstanding. The company uses the funds it receives from people exercising the warrants to fund their business.

Piggyback Warrant Example

Assume the above company also added a piggyback warrant to their $9 warrant discussed above. The piggyback warrant typically has a higher exercise price than the original warrant. Assume the piggyback warrant is exercisable at $12. The original warrant and the piggyback warrants may have the same expiry date, or the piggyback warrants may expire at a later date.

If the holder exercises their warrant at $9, because the stock price is above $9, then the $12 piggyback warrants come into existence. The holder now has the option to sell those warrants to another investor, or they can hold them and hope the stock price moves above $12. If the stock price moves above $12 it is worthwhile to exercise the piggyback warrant and buy the stock at $12.

If the original warrant is not exercised before it expires, then there is no piggyback warrant. If the price of the underlying stock doesn't reach $12 before the piggyback warrant expires, then the warrant becomes worthless and ceases to exist. Prior to expiry or being exercised warrants can be bought or sold, similar to an option contract.

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