Morning Commentary: Momo convertible notes active in early trading as stock plummets

By Abigail W. Adams

Portland, Me., Sept. 3 – There were again huge movements in the stocks of some convertible issuers on Thursday. However, trading volume was light early in the session with volume expected to continue to dwindle on Friday.

Momo Inc.’s 1.25% convertible notes due 2025 were the most actively traded name early in the session as the company’s equity tanked following its earnings report.

The notes traded down about 0.5 point with stock down about 15%.

The 1.25% notes were marked at 81.5 bid, 82.5 offered early in the session, a source said.

There was about $8 million of the bonds on the tape about one hour into the session.

The lack of movement in dollar-price is to be expected given with the conversion premium in the name is “massive,” a source said.

Momo’s American Depository Shares traded as low as $16.88 and were changing hands at $17.02, a decrease of 14.52%, shortly before 11 a.m. ET.

The Beijing-based mobile social networking platform’s equity was trading off on weak revenue and a downbeat forecast.

While Momo’s earning per share of $0.43 were in line with expectations, revenue of $547.5 million fell slightly short of expectations for revenue of $548 million.

Revenue forecasts for the third quarter also missed expectations.

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