Market flat post-Fed; Snap convertibles down outright; Teladoc gains; DISH improves

By Abigail W. Adams

Portland, Me., July 26 – The day markets had been waiting for came and went with no surprises – the Federal Open Market Committee announced a 25 basis point rate increase and a data dependent approach to further tightening.

Equity indexes were either side of flat after an initial bump at the outset of chair Jerome Powell’s press conference with Treasuries improved.

While equity indexes entered into positive territory as committee members upped their forecasts for economic growth and Powell expressed his belief that the rate hike campaign was doing its job, they closed the day mixed.

The Dow Jones industrial average closed up 82 points, or 0.23%, the S&P 500 index closed down 0.02%, the Nasdaq Composite index closed down 0.12% and the Russell 2000 index closed up 0.72%.

With the Fed announcement providing little volatility for the market, earnings and topical news drove the largest movements in the space.

Snap Inc.’s convertible notes fell outright as stock tanked on disappointing guidance.

Teladoc Health Inc.’s 1.25% convertible notes due 2027 gained on an outright and dollar-neutral basis as stock soared after an earnings beat.

DISH Network Corp.’s convertible notes (B3/CCC-) improved dollar-neutral as stock whipsawed after the company unveiled its long-speculated plan to sell wireless service through Amazon.

Snap’s earnings

Snap’s convertible notes fell outright as stock tanked double digits after posting earnings with disappointing guidance.

Snap’s 0.75% convertible notes due 2026 were down about 4 points outright with stock off almost 20%.

The notes were changing hands at 91.125 versus a stock price of $10.27 early in the session, according to a market source.

They improved into the close and ended the day at 91.5.

The notes move on a delta of about 54%, a source said.

Snap’s 0.25% convertible notes due 2025 also fell about 4.5 points outright.

They were seen at 93.875 versus a stock price of $10.07 early in the session.

The notes were trading at 93.75 into the close.

The theoretical delta on the notes is about 40%, a source said.

Snap’s stock traded to a low of $9.99 before closing at the session high of $10.73, a decrease of 14.23%.

While Snap’s earnings beat on both the top and bottom lines, weak guidance sparked a sell-off in stock.

Snap reported losses per share of 2 cents versus analyst expectations for losses per share of 4 cents.

Revenue was $1.07 billion versus the $1.06 billion expected.

Snap pegged third-quarter revenue between $1.07 billion and $1.13 billion versus the $1.13 billion expected.

Teladoc’s results

Teladoc’s 1.25% convertible notes due 2027 gained on an outright and dollar-neutral basis as stock soared on better-than-expected earnings results.

The high-premium notes rose about 1 point outright with stock up more than 20%.

The convertibles were changing hands at 80.875 in the late afternoon with the yield about 7%.

The notes improved about 0.5 point dollar-neutral, a source said.

Teladoc’s stock traded to a low of $24.32 and a high of $29.20 before closing at $28.92, an increase of 26.90%.

Teladoc reported losses of 40 cents per share versus analyst expectations for losses of 41 cents.

Revenue was $652.4 million versus analyst expectations for revenue of $649.2 million.

DISH better

DISH’s convertible notes improved in active trade on Wednesday as stock whipsawed after the struggling credit announced its long-speculated plans to sell its wireless service through Amazon.

DISH’s 0% convertible notes due 2025 gained about 0.75 point outright early in the session before getting dragged down 0.5 point outright in the late afternoon.

The notes were trading at 60.25 early in the session with the yield about 22.5%, according to a market source.

They sank back to a 59-handle and were changing hands at 59.75 in the late afternoon.

However, the notes gained about 0.5 point dollar-neutral, a source said.

DISH’s 3.375% convertible notes due 2026 popped 1.75 points outright to trade at 56.625 early in the session with a yield of 24.375%.

They gave back some gains and were changing hands at 55.75 heading into the market close.

The 3.375% notes gained about 1 point dollar-neutral.

DISH’s stock surged as much as 10% in premarket trading but sank into negative territory after the open as market players digested the announcement.

DISH’s stock traded to a high of $8.44 and a low of $7.10 before closing at $7.22, a decrease of 6.48%.

DISH formally announced on Tuesday its long-speculated partnership to sell its wireless service through Amazon.

While DISH’s equity was volatile, its bond movement suggested that it was a credit positive for the company.

However, the company remains a speculative credit with its refinancing risk high.

“They’ve got a lot of work to do,” a source said.

Mentioned in this article:

DISH Network Corp. Nasdaq: DISH

Snap Inc. NYSE: SNAP

Teladoc Health Inc. NYSE: TDOC

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