Morning Commentary: Tesla convertibles jump on strong quarter; Twitter notes contract

By Rebecca Melvin

New York, Oct. 24 – Tesla Inc.’s trio of convertible bonds jumped in heavy volume on Thursday after the electric carmaker reported an unexpectedly profitable third quarter.

Trading in the Tesla bonds dominated the Trace tape and showed a pop of 2.5 points to 3 points across the complex on a dollar-neutral basis.

“Tesla is the only name that anyone cares about today,” a New York-based market source said.

The Tesla Cs jumped 9 point on an outright basis to about 113.5. But all three bonds, the Bs, Cs and Ds have similar balanced profiles, the source said.

Shares of Tesla rose as much as 18.2% in early trading. It was last up $40.00, or 16%, to $295.65. The spike represented the best single day of trading in the stock since May 2013 and vaulted it to levels not seen since February.

The company showed that it is building cash. For convertible players the report showed that it is more solid in terms of credit, the source said.

Moving in the opposite direction were the convertibles of Twitter Inc. Shares of the social media company tanked after earnings and revenue fell short of expectations. The company said that software problems during the quarter made some advertisers pull back spending, which weighed on revenue.

The Twitter 0.25% convertibles due 2024 fell 6 points on an outright basis to 96.75.

Both the 2024 convertible and the Twitter 1% notes due 2021 were seen to have contracted about a point on a dollar-neutral basis.

“There was a change on the day in the longs,” a market source said, referring to the likelihood of outright selling.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.