Mitek on tap; secondary space quiet; fuboTV rally continues; First Majestic hits new heights

By Abigail W. Adams

Portland, Me., Feb. 1 – The convertible primary market launched the week with one offering on deck.

However, if equity markets remain strong, more deals are expected as the week progresses.

Mitek Systems Inc. plans to price $125 million of five-year convertible notes after the market close on Tuesday with price talk for a coupon of 0.75% to 1.25% and an initial conversion premium of 30% to 35%, according to a market source.

Jefferies LLC and William Blair & Co. LLC are joint bookrunners for the Rule 144A offering, which carries a greenshoe of $18.75 million.

Meanwhile, the secondary space had a quiet start to the week as equity markets pared their losses from last week’s sell-off.

There was $61 million in reported volume about one hour into the session and about $400 million on the tape in the late afternoon.

While equities were strong on Monday, investors appeared to be on the sidelines, waiting to determine the future direction of the market following one of the worst weeks for equities since last October.

Several convertible notes issuers were front and center to the ongoing battle on Wall Street between retail traders, dubbed the “Reddit Army,” and short-sellers – a battle which has sparked investors’ concerns about equity valuations.

fuboTV’s newly priced 3.25% convertible notes due 2026 remained in focus with the notes continuing to rip their second day in the secondary space.

First Majestic Silver Corp.’s 1.875% convertible notes due 2023 returned to focus as the mining company’s stock broke out to a new 52-week high as silver hit its highest price since 2013.

GoPro Inc.’s 1.25% convertible notes due 2025 were also active as stock skyrocketed with retail traders piling into the company.

fuboTV rips

fuboTV’s recently priced 3.25% convertible notes due 2026 continued to rip their second day in the secondary space.

The 3.25% convertible notes were changing hands at 112.375 early in Monday’s session and shot up to 118 in the late afternoon with stock up more than 20%.

The notes continued to make dollar-neutral gains and were up another 1 point on hedge, a source said.

fuboTV stock traded to a low of $44.30 before closing the day at the session high of $52.40, an increase of 24.02%.

There were some issues with the borrow on Monday, a source said.

However, hedge funds were active in the name with the majority of trading activity done on swap, a source said.

fuboTV stock is a favorite among retail traders that have organized on the Reddit chatroom “WallStreetBets.”

There was concern during bookbuilding that retail traders could drive fuboTV stock prices to GameStop levels and squeeze short-sellers out of their position.

However, that concern did not seem to deter hedge funds from utilizing a long-short strategy with fuboTV’s new convertible notes.

Silver lining

First Majestic’s 1.875% convertible notes due 2023 saw renewed attention in the secondary space as the silver mining company’s stock jumped more than 20%.

The 1.875% notes topped double par on Monday.

They were changing hands at 238 in the late afternoon.

The notes were trading about 1 point above parity. “They’re callable very shortly,” a source said.

First Majestic stock traded to a high of $24.01 and a low of $20.85 before closing the day at $22.12, an increase of 22.08%.

Stock skyrocketed as the “Reddit Army” allegedly took aim at commodities and pushed the price of silver to above $30 an ounce, its highest price since 2013, Bloomberg reported.

While surging silver prices have largely been attributed to retail traders, several Reddit users have refuted the claim and instead attributed the move in silver prices to hedge funds attempting to co-opt their movement, CNN Business reported.

GoPro’s high

GoPro’s 1.25% convertible notes due 2025 hit their highest outright level since pricing as stock soared with retail traders appearing to pile into the name.

The 1.25% notes rose more than 10 points outright to just north of 134 in the late afternoon.

The notes, which trade on a 75% delta, were largely moving in line with stock, a source said.

GoPro stock traded to a low of $9.12 and a high of $10.85 before closing the day at $10.53, an increase of 17.65%.

There was no fundamental reason for the spike in stock with GoPro apparently a new target for retail investors.

Mentioned in this article:

First Majestic Silver Corp. NYSE: AG

fuboTV NYSE: FUBO

GoPro Inc. Nasdaq: GPRO

Mitek Systems Inc. Nasdaq: MITK

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