Opendoor, Cloudflare hit new heights; Revance tanks; Ionis down outright, up on swap

By Abigail W. Adams

Portland, Me., Oct. 18 – The convertibles primary market remained dormant on Monday, as it has been for the past two weeks.

While October was expected to be an active month with several deals in the pipeline, market volatility combined with earnings season blackouts have dampened primary market activity.

While some sources expect to see some activity before the week is through, others say the calendar is “light to non-existent” for the next two weeks.

Meanwhile, the secondary space saw an active start to the week as growth and tech stocks outperformed on a mixed day for equities.

The Dow Jones industrial average closed the day down 36 points, or 0.10%, while the S&P 500 index closed the day up 0.34%, the Nasdaq Composite closed up 0.84% and the Russell 2000 index closed up 0.10%.

There was $125 million on the tape a little more than one hour into the session and $535 million in reported volume heading into the market close.

Opendoor Technologies Inc.’s 0.25% convertible notes due 2026 continued to hit new heights as competitor Zillow Group Inc.’s 1.375% convertible notes due 2026 dropped alongside stock.

Cloudflare Inc.’s 0% convertible notes due 2026 also set a new outright high on Monday as the cybersecurity company’s stock again broke out to a new 52-week high.

However, while tech and growth stocks saw a strong session, the biotech sector was under pressure with several negative headlines driving down the stocks of convertibles issuers in the space.

Revance Therapeutics Inc.’s 1.75% convertible notes due 2027 sank more than 20 points outright as stock got slaughtered after the Food and Drug Administration rejected a product in the company’s pipeline.

Ionis Pharmaceuticals Inc.’s 0% convertible notes due 2026 dropped outright but expanded dollar-neutral as stock hit a new 52-week low following disappointing results from a clinical study.

Opendoor gains

It was another strong day for the tech sector on Monday with several convertibles issuers logging their highest outright levels since pricing.

Opendoor’s 0.25% convertible notes due 2026 were up another 3 points outright with stock up more than 3%.

The 0.25% notes were changing hands at 143.875 versus a stock price of $24.97 early in the session.

They came in alongside stock and were seen changing hands at 142.375 versus a stock price of $24.33 in the late afternoon.

There was about $20 million in reported volume.

While the online real estate company’s stock opened the day in the red in sympathy with Zillow Group, it quickly turned positive on belief the company was poised to steal some market share from its brand-name competitor.

Opendoor’s stock traded to a low of $22.65 and a high of $25.27 before closing the day at $24.16, an increase of 3.12%.

Competitor and fellow convertible issuer Zillow’s stock, however, was under pressure after the online real estate company announced that it was slowing down on home purchases for its buy-and-flip program.

Zillow’s 1.375% convertible notes due 2026 were active as stock plummeted.

The high-dollar price bond was changing hands at 207 versus a stock price of $86.33 in the late afternoon.

There was about $10 million in reported volume.

Zillow’s stock traded to a low of $84.10 and a high of $87.87 before closing the day at $86, a decrease of 9.45%.

New heights

Cloudflare’s 0% convertible notes due 2026 and Coinbase Global Inc.’s 0.5% convertible notes due 2026 continued their upward momentum on Monday with both notes hitting their highest outright level since pricing.

Cloudflare’s 0% convertible notes were up more than 4 points outright as stock again set a new 52-week high.

The 0% convertible notes were changing hands just shy of 120.5 versus a stock price of $179.96 in the late afternoon.

Cloudflare’s stock traded to a low of $167 and a high of $182.90 before closing the day at $180.77, an increase of 7.77%.

The cybersecurity company’s stock has been on fire and risen more than 40% over the past month.

Cybersecurity companies, in general, have been a favorite among investors as ransomware attacks increase.

Biotech under pressure

Several biotech names were under pressure on Monday as negative news dragged down the companies’ stocks.

Revance’s 1.75% convertible notes due 2027 sank 21 points outright as stock dropped more than 30%.

The 1.75% convertible notes traded down to the low 80s after closing out Friday’s session above par.

They were changing hands at 81.875 versus a stock price of $13.85 in the late afternoon.

The off-the-run issue was in focus on Monday and saw more than $11 million in reported volume.

Revance’s stock traded to a high of $14.73 and a low of $13.01 before closing the day at $13.81, a decrease of 39.19%.

Stock tanked following news the FDA had rejected the company’s treatment for frown lines.

Ionis’ 0% convertible notes due 2026 were also active as stock dropped following disappointing results from a clinical trial.

The 0% notes dropped 4.5 points outright with stock down more than 13%.

The notes were changing hands at 89.875 versus a stock price of $30.28 in the late afternoon.

While down outright, the notes gained about 0.5 point dollar-neutral, a source said.

There was $12 million in reported volume.

Ionis’ stock traded to a low of $29.01 and a high of $33.12 before closing the day at $30.25, a decrease of 13.82%.

Mentioned in this article:

Cloudflare Inc. NYSE: NET

Coinbase Global Inc. Nasdaq: COIN

Ionis Pharmaceuticals Inc. Nasdaq: IONS

Opendoor Technologies Inc. Nasdaq: OPEN

Revance Therapeutics Inc. Nasdaq: RVNC

Zillow Group Inc. Nasdaq: Z

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