Morning Commentary: Zillow, Mindbody sink outright on stock moves; Twilio contracts

By Abigail W. Adams

Portland, Me., Nov. 7 – The convertible secondary space was active early in Wednesday’s session with the focus on convertibles issuers seeing 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 saw an expansion.

Twilio Inc.’s 0.25% convertible notes due 2023 saw large outright gains as stock surged on a large earnings beat, with the notes contracting on the way up.

To the penny

Mindbody’s 0.375% convertible notes due 2023 dropped to their lowest outright price since hitting the market in June.

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 7 points outright to 88.25 as stock dropped more than 15% after Mindbody reported third-quarter earnings.

While Mindbody reported an earnings beat on the top and bottom lines in the third quarter, stock sold off on fears of slower growth.

Mindbody expects revenue of $65 million to $67 million in the fourth quarter.

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 to 97.5 early in Wednesday’s session.

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

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

Zillow stock was down more than 20% early in Wednesday’s session after the company’s fourth quarter guidance fell short of expectations.

Twilio contracts

Twilio’s 0.25% convertible notes were contracting as the notes jumped 17 points outright as stock surged after a large earnings beat.

The 0.25% notes were contracted 1 point dollar-neutral as the notes traded up to 138.

Twilio stock jumped 31% early Wednesday.

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.

SendGrind, 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 more than 30% early Wednesday.

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