Pinduoduo convertible notes stabilize; Zendesk, Etsy expand dollar-neutral; stocks sink

By Abigail W. Adams

Portland, Me., July 30 – The convertibles secondary space saw a quiet end to the week with volume light as equities ended a volatile week in the red.

The Dow Jones industrial average closed the day down 149 points, or 0.42%, the S&P 500 index down 0.54%, the Nasdaq Composite down 0.71% and the Russell 2000 down 0.62%.

There was $95 million in reported convertibles trading volume about one hour into the session and $388 million about one hour before the close.

Pinduoduo Inc.’s 0% convertible notes due 2025 were again among the most actively traded names in the secondary space with the notes stabilizing after a brutal sell-off earlier in the week.

Zendesk Inc.’s 0.625% convertible notes due 2025 were making large moves as stock slid double digits following the company’s earnings report.

While the notes were down outright, they gained on a dollar-neutral basis on the move down.

Etsy Inc.’s 0.25% convertible notes due 2028 were also improved dollar-neutral as stock sold off on Friday with e-commerce companies under pressure following Amazon.com Inc.’s disappointing earnings report.

Pinduoduo stabilizes

Pinduoduo’s 0% convertible notes due 2025 remained active on Friday with the notes stabilizing after a brutal sell-off earlier in the week that saw the notes drop almost 10 points outright and contract several points on a dollar-neutral, or hedged, basis.

The 0% notes were changing hands in the 92 to 93 range on Friday.

They traded at 92.625 versus an equity price of $90.66 early in the session, according to a market source.

They were changing hands at 93 versus an equity price of $91.65 in the late afternoon.

There was more than $15 million in reported volume.

Pinduoduo’s American Depositary Shares traded to a high of $92.44 and a low of $88.84 before closing the day at $91.61, a decrease of 0.53%.

Zendesk’s earnings

Zendesk’s 0.625% convertible notes due 2025 saw large price movements during Friday’s session.

The high-dollar price bonds were down double digits on an outright basis alongside stock following the customer service software company’s earnings report.

However, the notes improved dollar-neutral on the move down.

The 0.625% notes were down about 16 points outright.

The notes were changing hands at 135.625 versus a stock price of $131.09 in the early afternoon.

They improved about 1 point dollar-neutral, a source said.

There was about $7 million in reported volume.

Zendesk’s stock traded to a high of $143.31 and a low of $127.59 before closing the day at $130.53, a decrease of 13.28%.

Stock plummeted after a top- and bottom-line earnings miss.

Zendesk reported earnings per share of 13 cents versus analyst expectations for earnings of 15 cents.

Revenue was $318.22 million versus analyst expectations for revenue of $320.4 million.

Etsy expands

Etsy’s 0.25% convertible notes due 2028 saw a fresh round of trading on Friday with the notes down outright but improved dollar-neutral as stock sold off.

The 0.25% notes were down about 4 points outright with stock off more than 7%.

The notes were changing hands in a tight range of 104.75 to 105.125 throughout Friday’s session.

They improved about 0.25 point dollar-neutral.

Etsy’s stock traded to a high of $192.55 and a low of $182.39 before closing the day at $183.51, a decrease of 7.77%.

The Brooklyn-based e-commerce company for vintage and handmade items was under pressure alongside other e-commerce companies on Friday following an earnings miss from Amazon.com Inc.

Mentioned in this article:

Pinduoduo Inc. Nasdaq: PDD

Zendesk Inc. NYSE: ZEN

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