Upwork, Alphatec expand on debut; Expedia, Zynga drop post-earnings

By Abigail W. Adams

Portland, Me., Aug. 6 – After a nearly two-week drought with no new paper, two deals totaling $775 million hit the secondary space on Friday.

Upwork Inc. priced $500 million in five-year convertible notes and Alphatec Holdings Inc. priced an upsized $275 million in five-year convertible notes after the market close on Thursday.

“The market was eager for it,” a source said.

The new paper was performing well in the secondary space with both issues trading up on an outright and dollar-neutral basis.

Outside of the new paper, there continued to be large price movements in the secondary space due to earnings-related volatility.

Zynga Inc.’s convertible notes were active with the notes dropping on an outright basis as stock tanked double digits.

Expedia Inc.’s 0% convertible notes due 2026 (Baa3/BBB-/BBB-) were down on an outright and dollar-neutral basis as stock also sold off.

Upwork in focus

Upwork priced $500 million of five-year convertible notes after the market close on Thursday at par with a coupon of 0.25% and an initial conversion premium of 42.5%.

Pricing came in the middle of talk for a coupon of 0% to 0.5% and at the rich end of talk for an initial conversion premium of 37.5% and 42.5%.

The new paper was in focus in the secondary space, accounting for the lion’s share of trading activity early in the session.

The 0.25% notes were changing hands at 101.5 versus a stock price of $45.54 early in the session.

They were wrapped around 101 in the late afternoon.

The notes expanded upwards of 2 points dollar-neutral.

There was more than $121 million in reported volume.

Upwork stock traded to a high of $46.09 and a low of $44.22 before closing the day at $44.87, a decrease of 3.23%.

Alphatec expands

Alphatec priced an upsized $275 million in five-year convertible notes after the market close on Thursday at the midpoint of talk with a coupon of 0.75% and an initial conversion premium of 32.5%.

Price talk was for a coupon of 0.5% to 1% and an initial conversion premium of 30% to 35%, according to a market source.

The greenshoe was also upsized to $41.25 million.

The initial size of the offering was $250 million with a greenshoe of $37.5 million.

While volume in the name was light, the notes were making gains.

The 0.75% notes were changing hands at 100.75 versus a stock price of $13.75 early in the session, according to a market source.

They climbed to trade at 101.25 versus a stock price of $13.94 in the late afternoon.

The notes expanded between 0.75 to 1 point dollar-neutral, a source said.

Alphatec stock traded to a low of $13.50 and a high of $14.18 before closing the day at $14.01, an increase of 1.23%.

Zynga down outright

Zynga’s convertible notes were active with the notes dropping on an outright basis as stock tanked following its earnings report.

Zynga’s 0.25% convertible notes due 2024 sank 15 points outright with stock off more than 18%.

They were changing hands at 115.125 in the late afternoon.

There was more than $29 million in reported volume.

Zynga’s 0% convertible notes due 2026 sank below par for the first time since pricing in December 2020.

The notes fell more than 8 points outright and were changing hands at 95.5 in the late afternoon.

There was about $20 million in reported volume.

Zynga stock traded to a high of $8.26 and a low of $7.92 before closing the day at $7.99, a decrease of 18.22% from Thursday’s $9.77 close.

While Zynga reported a top- and bottom-line earnings beat, stock tanked on weak guidance.

Zynga reported earnings of 2 cents per share versus analyst expectations for a loss of 2 cents.

Revenue was $720 million versus analyst expectations for revenue of $679.9 million.

However, Zynga forecast revenue of $665 million in the third quarter versus analyst expectations for revenue of $679.9 million.

Expedia down

Expedia’s 0% convertible notes due 2026 were down on an outright and dollar-neutral basis following disappointing earnings.

The 0% notes fell about 3 points outright.

They were changing hands at 104.875 in the late afternoon.

The notes contracted about 0.25 point on the move down.

However, demand remained strong for the investment-grade notes with plenty of buyers still in the market, a source said.

Expedia stock traded to a high of $150.95 and a low of $145.50 before closing the day at $148.89, a decrease of 7.92%.

The on-line travel company reported losses per share of $1.13 versus analyst expectations for losses of 65 cents.

However, the company beat on the top line with revenue of $2.11 billion versus analyst expectations for revenue of $2.04 billion.

Stock also dropped on concern over the Covid-19 delta variant’s impact on travel.

Mentioned in this article:

Alphatec Holdings Inc. Nasdaq: ATEC

Expedia Inc. Nasdaq: EXPE

Upwork Inc. Nasdaq: UPWK

Zynga Inc. Nasdaq: ZNGA

© 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.