Growth stocks rebound; Coinbase, Unity Software, Upstart convertibles up; Twitter falls

By Abigail W. Adams

Portland, Me., May 13 – It was an active day in the convertibles secondary space on Friday as equities pared their losses from a brutal week.

Equity indexes were firmly in the green on Friday with little selling into the rally to drag them down as had occurred during attempted rebounds earlier in the week.

“They might actually hold this time,” a source said.

The Dow Jones industrial average closed Friday up 466 points, or 1.47%, the S&P 500 index closed up 2.39%, the Nasdaq Composite index closed up 3.82% and the Russell 2000 index closed up 3.06%.

There was $124 million in reported volume about one hour into the session and $590 million on the tape about one hour before the market close.

Coinbase Global Inc.’s 0.5% convertible notes due 2026 staged a rebound alongside the cryptocurrency exchange’s stock as Bitcoin again broke $30,000 after a flash crash the previous session.

Affirm Holdings Inc.’s 0% convertible notes due 2026 were also on the rise after a surprise earnings beat with stock up double digits following earnings, in contrast to the recent trend.

Upstart Holdings Inc.’s 0.25% convertible notes due 2026 and Unity Software Inc.’s 0% convertible notes due 2026 were also bouncing off their lows after cratering following earnings.

While several names were on the rebound early Friday, Twitter Inc.’s convertible notes were not among them after Elon Musk announced his takeover offer for the company was on hold.

Coinbase gains

Coinbase’s 0.5% convertible notes due 2026 continued to dominate activity in the secondary space with the notes recouping some of their losses from the previous two sessions.

Coinbase’s convertible notes were up more than 10 points outright with stock up more than 20% in intraday activity.

The notes were changing hands just shy of 64 versus a stock price of $68.11 early in the session.

They rose to trade at 68.625 in the late afternoon.

There was $43 million in reported volume.

Coinbase’s stock traded to a high of $74.25 and a low of $65.50 before closing the day at $67.87, an increase of 16.02%.

The notes have recouped nearly all their losses after the cryptocurrency exchange announced a large earnings miss.

The notes dropped about 11 points outright over the past two session following a large earnings miss and the flash crash of Bitcoin.

Affirm’s earnings

Affirm broke the trend of convertible issuers that saw their stock drop double digits following earnings with the buy-now, pay-later firm jumping double digits after a surprise earnings beat.

The results lifted Affirm’s long-busted 0% convertible notes due 2026.

The 0% notes rose 2.375 points outright.

The notes were changing hands just north of 60.25 versus a stock price of $23.59 early in the session.

They came in as the session progressed and were trading at 59.875 versus a stock price of $23.14 in the late afternoon.

There was $22 million in reported volume.

Affirm’s stock traded to a low of $21.21 and a high of $25.32 before closing the day at $23.71, an increase of 31.43%.

Affirm’s shares jumped after a surprise earnings beat with the company reporting losses per share of 19 cents versus analyst expectations for losses per share of 39 cents.

Revenue was $354.76 million versus analyst expectations for revenue of $344.01 million.

Lifted

Several convertible issuers saw their notes and equity lifted on Friday after falling to all-time lows earlier in the week.

Unity Software’s 0% convertible notes due 2026 rose 2 points outright with stock up more than 10%.

They were changing hands just shy of 72.5 versus a stock price of $38.40 in the late afternoon.

There was $16 million in reported volume.

Unity’s stock traded to a high of $40.49 and a low of $36.65 before closing the day at $39.10, an increase of 11.46%.

The 0% notes were on the rebound as stock pared losses after cratering post earnings. The notes hit an all-time low of 69 on Wednesday after reporting earnings.

While Unity’s stock has pared its losses, it is still down more than 30% on the week.

Upstart Holdings’ 0.25% convertible notes due 2026 also regained some footing with Affirm’s earnings results lifting the fintech space.

The notes gained about 1.5 points outright and were changing hands at 58.5 versus a stock price of $36.74 in the late afternoon.

There was $10 million in reported volume.

Upstart Holdings’ stock traded to a low of $33.16 and a high of $38.29 before closing the day at $38.13, an increase of 16.32%.

Upstart’s convertible notes have seen steep losses since the company reported earnings earlier in the week.

The notes traded down to a 57-handle on Thursday.

While Upstart’s stock pared its losses on Friday, it is still down more than 52% on the week.

Twitter down

While it was a green day for risk assets, Twitter was in the red after Musk announced his takeover deal was on hold.

“Surprise, surprise,” a source said.

Twitter’s 0% convertible notes due 2026 fell 2.625 points outright to trade at 89.25 early in the session.

They remained on an 89-handle heading into the close.

There was $10 million in reported volume.

Twitter’s 0.25% convertible notes due 2024 fell to a par-handle early in the session but pared their losses as the session progressed.

The 0.25% convertible notes were changing hands at 100.375 versus a stock price of $39.96 early in the session.

They were trading at 101.625 versus a stock price of $40.81 in the late afternoon.

There was $8 million in reported volume.

Twitter’s stock traded to a low of $40.01 and a high of $42 before closing the day at $40.72, a decrease of 9.69%.

Twitter’s convertible notes occupied the attention of the secondary space throughout late April as Musk’s takeover ambitions for the company unfolded.

The 0% notes traded as high as 96 on the prospects of a change-of-control put.

However, they weakened as questions grew about the equity portion of Musk’s financing for the takeover.

Mentioned in this article:

Affirm Holdings Inc. Nasdaq: AFRM

Coinbase Global Inc. Nasdaq: COIN

Twitter Inc. NYSE: TWTR

Unity Software Inc. NYSE: U

Upstart Holdings Inc. Nasdaq: UPST

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