Convertibles trading potentially bright on Thursday; EQT slides; Tetra Tech strengthens

Chicago, Aug. 23 – The major equity indexes ended Wednesday on a positive note as the anticipation of two events on the calendar for later in the week had market players focused more on the immediate horizon than Wednesday’s trading.

Nvidia Corp.’s earnings report was scheduled to drop as soon as the market closed, an event that has changed the trajectory of the broader market in the past.

Early investor response was positive as the multinational tech company that trades on the Nasdaq crushed the quarter’s results and the company announced that it was raising expectations by around $3.5 billion to $16 billion.

Nvidia’s stock was nearly up 9% in the first hour of aftermarket trading. The report, barring other surprises, should lift many names on the Nasdaq on Thursday.

The market is also sitting in idle mode until Federal Reserve chair Jerome Powell takes the lectern on Friday at the central bank’s annual economic symposium.

His speech is scheduled for Friday morning, enough time to shake prices loose one way or another going into the weekend.

EQT falls

Energy company EQT Corp.’s 1.75% convertibles due 2026 were sliding on the tape on Wednesday as the company closed an acquisition of Tug Hill and XcL Midstream, paid for with 49.6 million shares of common stock and $2.4 billion in cash.

The larger reported trades put the bonds roughly in the 288 to 289 area. Prices had jumped to over 300 on Monday.

The bonds have been in the mode of a generally steady ascent since mid-March, mirroring a climb in the company’s stock price.

Year to date, the stock is up 31.21%.

However, on Wednesday it was off by 3.8% to close the day at $41.75.

Akamai in focus

Akamai Technologies Inc.’s 1.125% convertible notes due 2029 were still in the limelight on Wednesday after working centerstage on Tuesday.

The notes were continuing to notch gains in early reported trades, routinely topping 99 and then marked at 99.4 at the end of trading hours.

The issue priced on Aug. 15 but has been moving below par its entire time in the market.

However, slowly over the last few days the notes have been firming near, but not quite up to, their original par price.

The cloud service company’s stock was up another 1.2% to finish at $102.44 on Wednesday.

Tetra Tech in play

Tetra Tech Inc.’s 2.25% five-year convertible senior notes, from recent issues, were also in play on Wednesday.

Announced on Tuesday evening, the greenshoe was fully utilized by underwriters to bring the offering size to $575 million.

The consulting and engineering services provider priced its offering on Aug. 17 at par.

Their initial foray into the secondary market pushed the price on the notes quickly to 101.

The notes have yet to dip below par but have also managed to relax. They had a strong day on the tape on Wednesday.

Spurred back into activity, the notes managed to hold above 101 all day, landing late in the day at 101.5.

They started the week above par but below 101.

Tetra Tech’s stock price has not yet recovered from the pricing of the new convertibles. It initially lost around $10 per share to drop to $157.31 when the convertibles were announced. However, Wednesday shifted the shares up on the day 0.3%, to $158.89.

Peloton backpedals

Peloton Interactive Inc.’s zero-coupon convertibles due in February 2026 were stepping back a couple of points on Wednesday.

The notes were dipping into the 73 zone and then were pulled back to 74 near the close.

On Tuesday, the notes were reported to be at a strong 76.

The at-home fitness company reported earnings on Wednesday.

The company’s stock closed the day down 22.6%, to go out at $5.41 per share.

Convertible note investors seem to have already baked in the expectation that the company was not doing well.

In a shareholder letter, chief executive officer Barry McCarthy said that subscriber slowdown in Q4 exceeded their expectations.

He warned that the company does not expect to remain cash flow positive in the two upcoming quarters, either.

The company’s hope on growth is partially tied right now to a rental service.

RingCentral sale

Late in the day, a trader noted and mentioned that RingCentral, Inc.’s chief executive officer and chairman Vladimir Shmunis sold $1.93 million of his shares.

The cloud-based company’s stock is 17.21% lower year to date, trading at $28.63 per share on Wednesday.

Shmunis parted with around 13% of his stock holdings in the company on Monday and Tuesday, according to form 4 filing with the Securities and Exchange Commission.

The company’s chief financial officer also reported a disposal after 4 p.m. ET, a much smaller percentage but around $263,000.

Joining the exodus, the company’s deputy chief financial officer sold off a 10% stake this week for around $354,000.

John H. Marlow, the company’s general counsel, let go of over $500,000, or nearly 6% of his part of the company.

Paul A. Harris contributed to this story.

Mentioned in this story:

Akamai Technologies Inc. Nasdaq: AKAM

EQT Corp. NYSE: EQT

Peloton Interactive Inc. Nasdaq: PTON

RingCentral, Inc. NYSE: RNG

Tetra Tech Inc. Nasdaq: TTEK

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