A stock warrant is essentially a legal agreement between a company and an investor. This agreement, or warrant, gives the investor the right to purchase shares in the company at a specified price.
Stock warrants must specify an expiration date and the holder of the warrant (the investor) must exercise the warrant before the expiration rate; otherwise, the warrant will expire and the holder will no longer be able to exercise it. Holders of warrants are under no obligation to exercise the warrant and may simply choose to let the warrant expire.
Depending on the specific warrant agreement, some agreements may also include contract provisions that allow the holder of the warrant to transfer their purchase rights to another party.