Pluralsight convertibles drop outright, expand dollar-neutral; Whiting Petroleum tanks

By Abigail W. Adams

Portland, Me., Aug. 1 – Volatility was the name of the day on Thursday with equity markets starting the day out strong only to sell off in the afternoon after president Donald Trump announced additional tariffs on China due to the slow pace of negotiations.

The convertible secondary space saw an uptick in trading volume on Thursday with $87 million on the tape about one hour into the session and $370 million in reported volume by the mid-afternoon.

Several convertibles issuers saw large stock moves in the wake of their earnings reports.

However, one name dominated activity in the secondary space – Pluralsight Inc.

Pluralsight’s 0.375% convertible notes due 2024 tanked on an outright basis but saw a large dollar-neutral expansion as stock cratered following the online education company’s second-quarter earnings report.

Whiting Petroleum Corp.’s 1.25% convertible notes due 2020 also saw high-volume activity as stock cratered following a large earnings miss.

While less active, Five9 Inc.’s 0.125% convertible notes due 2023 jumped alongside stock after an earnings beat.

Pluralsight in focus

Pluralsight’s 0.375% convertible notes due 2024 dominated activity in the secondary space on Thursday.

The notes sank outright but expanded dollar-neutral as stock cratered in the wake of a disappointing earnings report.

The 0.375% convertible notes dropped more than 18 points outright. They were changing hands at 90.375 early in the session and dropped to 89.625 by the late afternoon, sources said.

However, the notes saw a large expansion on a dollar-neutral basis.

One source saw the notes expanded 4 points dollar-neutral early in the session. Another source placed the expansion at 1.5 to 2 points dollar-neutral in the afternoon.

The notes saw more than $60 million in reported volume heading into the market close.

Pluralsight stock traded as low as $18.16 before closing the day at $18.56, a decrease of 39.52%.

Stock cratered following a mixed earnings report and weak forward guidance.

Pluralsight reported losses per share of 6 cents versus analyst expectations for earnings per share of 14 cents.

However, the company beat on the top line with revenue of $75.9 million versus analyst expectations for revenue of $73.8 million, MarketWatch reported.

Pluralsight projected revenue of $79.5 million to $80 million for the third quarter versus analyst expectations for revenue of $82 million.

Whiting Petroleum craters

Whiting Petroleum’s 1.25% convertible notes due 2020 were second only to Pluralsight in trading activity during Thursday’s session.

The 1.25% notes dropped about 0.5 point outright in the high-volume activity.

They were changing hands at 96.5 early in the session and dropped to 96.375 in the late afternoon, sources said.

The notes are not equity sensitive and mostly trade for their yield. The yield on the notes rose to 7% during Thursday’s session.

More than $41 million of the bonds were in play by late Thursday afternoon.

Whiting Petroleum stock cratered after the oil exploration and production company reported a large earnings miss.

Stock closed Thursday at $10.84, a decrease of 38.69%.

Whiting reported a loss per share of 28 cents versus analyst expectations for earnings per share of 27 cents.

The company also announced that it was reducing staff by 33%, Bloomberg reported.

Five9 jumps outright

While volume was light, Five9’s 0.125% convertible notes due 2023 jumped on an outright basis alongside stock after a large earnings beat.

The 0.125% notes traded up 18 points to 154.625, according to a market source.

Five9 stock traded as high as $61.42 before closing the day at $57.53, an increase of 16.53%.

Five9 reported earnings per share of 20 cents versus analyst expectations for earnings per share of 12 cents.

Revenue was $77.4 million, which was in line with expectations.

Stock was also on the rise after JPMorgan upgraded it to “overweight” from “neutral” and raised their price target to $70 from $59.

Mentioned in this article:

Five9 Inc. Nasdaq: FIVN

Pluralsight Inc. Nasdaq: PS

Whiting Petroleum Corp. NYSE: WLL

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