Coinbase convertibles lose more ground; Beyond Meat craters; Wayfair, Shopify active

By Abigail W. Adams

Portland, Me., May 12 – The convertibles secondary space remained active on Thursday as volatility continued to roil risk assets.

Equity markets again wavered between large gains and losses before closing the day mixed.

The Dow Jones industrial average closed down 104 points, or 0.33%, the S&P 500 index closed down 0.13%, the Nasdaq Composite index closed up 0.06% and the Russell 2000 index closed up 1.24%.

There was $148 million in reported volume about one hour into the session and $770 million on the tape about one hour before the market close.

Earnings-related volatility continued to be a driving force of trading activity with convertibles issuers continuing to disappoint with their results.

Beyond Meat Inc.’s 0% convertible notes due 2027 plunged outright with a large earnings miss continuing to raise concern about the company’s prospects.

Coinbase Global Inc.’s 0.5% convertible notes due 2026 continued to lose ground after a flash sale in cryptocurrencies drove Bitcoin down as much as 10% in overnight trading.

While down as much as 6 points outright early in the session, the notes pared their losses as the session progressed.

Wayfair Inc.’s 1% convertible notes due 2026 and Shopify Inc.’s 0.125% convertible notes due 2025 were lifted off their lows in active trading with the e-commerce companies on the rise after a brutal month.

Beyond Meat crumbles

Beyond Meat continued to raise red flags with its 0% convertible notes due 2027 plunging following earnings.

The 0% convertible notes were down more than 10 points outright early in the session but pared their losses and were down about 7 points heading into the close.

The 0% convertible notes were changing hands at 36.75 early in the session. They regained some footing and were changing hands at 41.25 in the late afternoon.

The yield on the notes shot as high as 20.5% early in the session but was just north of 19% heading into the market close.

There was $16 million in reported volume.

Beyond Meat’s stock wavered between large gains and losses as its deeply distressed convertible notes plunged.

Beyond Meat’s stock traded to a new 52-week low of $20.50 and a high of $29.40 before closing the day at $25.08, a decrease of 4.17%.

Stock was volatile after the plant-based food producer reported a large earnings miss.

Beyond Meat reported losses per share of $1.58 versus analyst expectations for earnings of 98 cents.

Revenue was $109.46 million versus analyst expectations for revenue of $111.60 million.

Beyond Meat’s 0% convertible notes have long been in distressed territory with the company’s stock down more than 82% since the plant-based food company priced the $1.15 billion issue at par in March 2021.

Coinbase volatile

Losses continued to mount for Coinbase’s 0.5% convertible notes due 2026 although the notes rebounded alongside the broader market as the session progressed.

The 0.5% convertible notes were down 6 points outright early in the session to change hands at 53.5 with the yield 16.813%, according to a market source.

However, they regained some lost ground and traded up to 57.25 in the late afternoon with the yield just shy of 15%.

The notes continued to dominate activity in the secondary space with $23 million in reported volume.

Coinbase’s stock traded to a low of $40 and a high of $60.30 before closing the day at $58.50, an increase of 8.9%.

Stock fell 26.40% after the cryptocurrency exchange announced a large earnings miss and included a new risk factor in its 10-Q report that sparked bankruptcy fears.

While Coinbase’s CEO assured investors the risk factor was the result of new SEC requirements and the company was not at risk of bankruptcy, the flash crash of cryptocurrencies due to the decoupling of TerraUSD, a stable coin that was tied to a $1 value, further fueled concerns.

While Bitcoin fell as much as 10% in overnight trading, it pared its losses and briefly turned positive during U.S. equity market hours.

However, it again slipped to trade at $28,721, a decrease of 1.32%, shortly after the close of U.S. equity markets.

E-commerce improves

Wayfair’s 1% convertible notes due 2026 and Shopify’s 0.125% convertible notes due 2025 improved outright as e-commerce companies’ stock saw a reprieve after a brutal month for the sector.

Wayfair’s 1% convertible notes were up about 0.875 point outright to change hands at 72.75 in the late afternoon, according to a market source.

There was $17 million in reported volume.

Wayfair’s stock traded to a high of $58.26 and a low of $49.54 before closing the day at $55.76, an increase of 5.99%.

The e-commerce company has seen its stock cut in half over the past month following a large earnings miss and general pressure on e-commerce companies.

The 1% convertible notes saw their lowest close on Wednesday since pricing at par in August 2020 with the notes ending the day at 71.875.

Shopify’s 0.125% convertible notes due 2025 were also lifted off their lows during Thursday’s session.

The 0.125% notes also gained about 1 point outright to change hands at 84 in the late afternoon.

The notes traded as low as 82.5 early in the session, their lowest outright level since the $920 million issue priced at par in September 2020.

There was $17 million in reported volume.

Shopify’s stock traded to a low of $308.06 and a high of $385 before closing the day at $353.51, an increase of 10.96%.

Shopify’s stock has fallen 41% in the past month following disappointing earnings.

Shopify’s 0.125% convertible notes traded as high as 138 at their peak in November 2021.

However, they broke below par in February and have been on a strong downtrend since.

Mentioned in this article:

Beyond Meat Inc. Nasdaq: BYND

Coinbase Global Inc. Nasdaq: COIN

Shopify Inc. NYSE: SHOP

Wayfair Inc. NYSE: W

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