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Morning Commentary: Five9 convertible notes in focus early, gain post-earnings
By Abigail W. Adams
Portland, Me., Nov. 8 – The convertibles primary market remained dormant early Tuesday with prospects for new issuance low amid continued volatility in markets.
Trading activity in the convertibles secondary space remained muted as equity indexes again wavered between gains and losses at the open before being pushed firmly into the green shortly after 11 a.m. ET.
The Dow Jones industrial average was up 1.18%, the S&P 500 index was up 0.89%, the Nasdaq Composite index was up 0.96% and the Russell 2000 index was up 0.57% shortly after 11 a.m. ET.
Earnings related volatility continued to be a driver for activity in the secondary space with Five9 Inc.’s 0.5% convertible notes due 2025 the name of the day.
Five9’s 0.5% convertible notes were on the rise on an outright basis as stock surged following earnings.
The 0.5% convertible notes gained about 4 points outright with stock up almost 15% in early trading.
The notes were changing hands at 88.25 early in the session.
The convertibles improved on a dollar-neutral, or hedged, basis on the move up, a source said.
After falling double digits pre-open, Five9’s stock surged double digits as the market responded to earnings.
Five9’s stock was seen at $54.21, an increase of 15.05%, shortly before 11 a.m. ET.
The cloud software company’s stock initially fell post-earnings after full year revenue guidance was cut to $774.5 million to $775.5 million from $780.5 million to $782.5 million and projected earnings per share was reduced to $1.35 to $1.37 from $1.38 to $1.40.
However, the reduced guidance was in line with expectations and Five9 delivered strong earnings with 39 cents per share versus the 36 cents expected on revenue of $198.34 versus the $196.39 expected.
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