Zillow, Mindbody, Jazz Pharmaceuticals, Twilio, Etsy active; Infinera ‘disaster du jour’

By Abigail W. Adams

Portland, Me., Nov. 7 – The convertible secondary space was active on Wednesday with the focus on convertibles issuers that saw large stock moves post-earnings.

While Mindbody Inc.’s 0.375% convertible notes due 2023 and Zillow Group Inc.’s 2% convertible notes due 2021 saw large outright movements as stock tanked, the notes were “surprisingly” unchanged dollar-neutral, a market source said.

However, Zillow’s 1.5% convertible notes due 2023 expanded.

Twilio Inc.’s 0.25% convertible notes due 2023 saw large outright gains with its stock the top performer on the New York Stock Exchange.

While some sources saw the notes contracting early in the session, others saw them expanded later in the afternoon.

Etsy Inc.’s 0% convertible notes due 2023 saw gains on both an outright and dollar-neutral basis as stock gained post earnings.

Jazz Pharmaceuticals plc’s 1.5% convertible notes due 2024 gained dollar-neutral as they dropped outright with stock sinking post earnings.

However, Infinera Corp.’s 2.125% convertible notes due 2024 were the ‘disaster du jour’ with the notes down several points dollar-neutral as stock dropped more than 30%.

To the penny

Mindbody’s 0.375% convertible notes due 2023 dropped to their lowest outright price since hitting the market in June as stock tanked, despite an earnings beat.

However, the notes were nuking alongside stock down to the penny, a market source said.

“It’s rare to not see an expansion on this kind of a move,” the source said.

The notes dropped about 8 points outright to 87.5 during Wednesday’s session.

Mindbody stock closed Wednesday at $26.18, a decrease of 19.77%.

While Mindbody reported an earnings beat on the top and bottom lines in the third quarter, stock sold off on weak forward guidance.

Mindbody reported a non-GAAP loss per share of 5 cents, which beat analyst expectations of a loss per share of 7 cents.

The cloud-based business management software company reported revenue of $64 million, which was largely in line with expectations.

However, Mindbody expects revenue of $65 million to $67 million in the fourth quarter versus analyst expectations for $68 million.

Mindbody stock was downgraded to “neutral” from “buy” by UBS analysts and to “neutral” from “overweight” by JPMorgan analysts on Wednesday.

Zillow mixed

Zillow’s convertible notes were mixed as stock sank after the online real estate company reported third-quarter earnings.

Zillow’s 2% convertible notes due 2021 were unchanged dollar-neural as they sank below par on Wednesday.

The notes dropped 10 points outright to 97.

However, Zillow’s 1.5% convertible notes due 2023 saw a 1-point expansion as they sunk to their lowest outright price since hitting the market in late June, a market source said.

Another source pegged the 1.5% notes up 1.5 points on a dollar-neutral basis.

The 1.5% notes dropped to an 86 handle on Wednesday.

Zillow stock “got crushed” after the company’s fourth-quarter guidance fell short of expectations, a market source said.

Zillow stock was among the worst performers on the Nasdaq on Wednesday with Infinera one of the only names to see a greater decline.

Zillow stock closed Wednesday at $29.99, a decrease of 26.92%.

Zillow reported non-GAAP earnings per share of 18 cents for the third quarter, which beat analyst expectations of earnings per share of 17 cents.

Zillow reported revenue of $343 million, which was in line with expectations.

However, Zillow announced it expects adjusted EBITDA of $26 million to $38 million in the fourth quarter and was lowering its future outlook.

Twilio’s earnings beat

Twilio’s 0.25% convertible notes due 2023 jumped more than 24 points outright as stock surged after third-quarter earnings and forward guidance beat expectations.

The 0.25% notes were seen contracted by 1 point dollar-neutral as the notes traded up to 138 early in Wednesday’s session.

They were seen expanded 1.5 points with the notes trading up to 145.5 in the mid-afternoon.

Twilio stock was the best performing stock on the New York Stock Exchange on Wednesday. It closed the day at $96.19, an increase of 35.44%.

The cloud communications platform reported earnings of 7 cents per share for the third quarter on revenue of $168.9 million versus analyst expectations for earnings per share of 2 cents on revenue of $150.4 million.

SendGrid, which Twilio announced it would acquire for $2 billion in a deal closing the first half of 2019, also beat in its third-quarter earnings report and saw its stock jump to $46.45, an increase of 35.54%.

Etsy gains

Etsy’s 0% convertible notes due 2023 saw gains on both an outright and dollar-neutral basis as stock surged after an earnings beat.

The 0% convertible notes jumped 24 points outright to 152 with stock up more than 20%.

They were expanded about 1 point dollar-neutral, according to a market source.

Etsy stock closed Wednesday at $50.01, an increase of 23.7%.

Etsy reported non-GAAP earnings per share of 15 cents versus analyst expectations for earnings of 7 cents.

Etsy raised its 2018 guidance to between $596 million to $600 million versus its previous guidance of $587 million to $596 million.

Jazz expands

Jazz Pharmaceuticals’ 1.5% convertible notes due 2024 were expanding as they dropped below par in active trading on Wednesday.

The 1.5% notes traded down about 4 points outright to 96.75 as stock sank 12%. They were expanded about 1 point dollar-neutral, a market source said.

Jazz stock closed Wednesday at $140.41, a decrease of 14.6%.

While Jazz reported a third-quarter earnings beat on the bottom line, revenue and forward guidance disappointed.

Jazz reported non-GAAP earnings per share of $3.58 versus analyst expectations of an earnings per share of $3.33.

The pharmaceutical company reported revenue of $469.4 million versus expectations for revenue of $482 million with sales falling short of expectations.

Infinera a disaster

Infinera’s 2.125% convertible notes due 2024 were the ‘disaster du jour,’ with the notes down more than 3 points dollar-neutral and 16 points outright, sources said.

The notes traded down to 76.25 during Wednesday’s session as stock tanked more than 30% after the optical transmission equipment manufacturer reported third-quarter earnings.

The notes were contracted 3.5 points dollar-neutral, a market source said.

Infinera stock closed Wednesday at $4.15, a decrease of 33.39%.

Infinera reported a non-GAAP loss per share of 4 cents for the third-quarter, which was in line with analyst expectations.

However, Infinera missed on its top line with revenue of $200 million versus analyst expectations of revenue of $210 million.

Revenue projections of $1.4 billion for the year fell short of analyst expectations for revenue of $1.66 billion.

The revenue guidance is largely due to problems associated with the integration of operations after its merger with Coriant, StreetInsider.com reported.

Infinera priced a $402.5 million issue of the 2.125% convertible notes at par in September with proceeds to be used for the Coriant acquisition.

Mentioned in this article:

Etsy Inc. Nasdaq: ETSY

Infinera Corp. Nasdaq: INFN

Jazz Pharmaceuticals plc Nasdaq: JAZZ

Mindbody Inc. Nasdaq: MB

Twilio Inc. NYSE: TWLO

Zillow Group Inc. Nasdaq: Z

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