Zynga convertibles gain; Sea improves post-earnings; Upstart rebounds; Pinduoduo softer

By Abigail W. Adams

Portland, Me., May 17 – It was an active day in the convertibles secondary space as equity markets rallied after a choppy session on Monday.

While Federal Reserve chairman Jerome Powell reiterated a hawkish stance to curb inflation, the risk-on sentiment that launched the day remained strong at the session close, bolstered by stronger-than-expected retail sales data.

The Dow Jones industrial average closed the day up 431 points, or 1.34%, the S&P 500 index closed up 2.02%, the Nasdaq Composite index closed up 2.76% and the Russell 2000 index closed up 3.19%.

There was $121 million of reported convertible bond trading on the tape about one hour into the session and $638 million in volume heading into the market close.

Zynga Inc.’s 0.25% convertible notes due 2024 were on the rise after Take-Two Interactive Software Inc., which is expected to complete its acquisition of Zynga by the end of the month, posted a surprise earnings beat.

Sea Ltd.’s 0.25% convertible notes due 2026 gained in heavy volume after the Singapore-based consumer internet company posted a surprise earnings beat.

While it was a strong day for the ADR space in equity markets as headlines indicated more relief from Beijing’s regulatory crackdown, Pinduoduo Inc.’s 0% convertible notes due 2025 were softer in active trading.

Upstart Holdings Inc.’s 0.25% convertible notes due 2026 continued to bounce off their lows on a strong day for growth and tech stocks.

Zynga gains

Zynga’s 0.25% convertible notes due 2026 were on the rise in active trading on Tuesday with the social video game developer on the cusp of being acquired.

The 0.25% convertible notes gained 4.5 points outright.

They were changing hands at 114.625 in the late afternoon.

There was $17 million in reported volume.

Zynga’s stock traded to a high of $8.53 and a low of $8.24 before closing the day at $8.47, an increase of 6.94%.

However, the convertible notes were lifted as a result of Take-Two Interactive’s surprise earnings beat.

Take-Two, which is set to complete its acquisition of Zynga by the end of the month, saw its stock jump double-digits following earnings.

The video game holding company’s stock traded to a high of $124.59 and a low of $117.64 before closing the day at $123.08, an increase of 11.78%.

In January, Take-Two announced it would acquire Zynga in a cash and stock transaction with an enterprise value of $12.7 billion.

Take-Two will purchase Zynga shares for $9.86 each with Zynga shareholders receiving $3.50 in cash and $6.36 in Take-Two stock, according to the original deal terms.

The merger is expected to close on May 23.

Zynga’s convertible notes will be taken out in the acquisition.

Sea’s earnings

Sea’s long-busted 0.25% convertible notes due 2026 were on the rise in heavy volume after the Singapore-based consumer internet company reported earnings.

The 0.25% notes were changing hands just shy of 74 versus an equity price of $76.31 with a yield of 7.5% early in the session, according to a market source.

They rose to a 74-handle as the session progressed and were seen changing hands at 74.5 versus an equity price of $80.45 with a yield of 7.196% in the late afternoon.

There was $16 million in reported volume.

Sea’s American Depositary Shares traded to a high of $83.21 and a low of $75 before closing the day at $80.21, an increase of 14.10%.

Sea’s equity surged after the company reported losses per share of 80 cents versus analyst expectations for loses of $1.17.

Revenue was $2.90 billion versus analyst expectations for revenue of $2.89 billion.

Pinduoduo down

Pinduoduo’s 0% convertible notes due 2025 were softer in active trading despite a rally in the equity of Asia-based companies.

The 0% convertible notes fell 1 point to an 86-handle.

They were changing hands at 86.5 versus an equity price of $40.08 in the late afternoon, according to a market source.

The notes were trading with a yield of 9.685%.

There was $15 million in reported volume.

Pinduoduo’s ADSs traded to a high of $42.90 and a low of $39.33 before closing the day at $40.16, an increase of 6.13%.

The ADR space was lifted after headlines again indicated Beijing was ready to curb its regulatory clampdown on its tech behemoths.

Upstart rebounds

Upstart’s 0.25% convertible notes due 2026 continued to gain in active trading on Tuesday.

The notes rose another 1.75 points outright with stock up another 20%.

The notes were changing hands at 61 versus an equity price of $44.68 heading into the market close.

The yield on the notes was 12.34%.

There was $13 million in reported volume.

Upstart’s stock traded to a low of $38.68 and a high of $46.87 before closing the day at $46.66, an increase of 23.47%.

The stock has rebounded strongly over the past three sessions after getting cut in half following earnings on May 10.

The convertible notes traded down to a 56-handle as stock cratered.

However, they have been on an upswing over the past three sessions.

Mentioned in this article:

Pinduoduo Inc. Nasdaq: PDD

Sea Ltd. NYSE: SE

Upstart Holdings Inc. Nasdaq: UPST

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.