Pioneer Natural Resources convertibles eyed; Twitter weaker; Spotify lower post-earnings

By Abigail W. Adams

Portland, Me., April 27 – The convertibles secondary space continued to see an uptick of activity with equity markets volatile following Tuesday’s bloodbath.

Equity indexes wavered between large gains and losses before closing the day mixed.

The Dow Jones industrial average closed Wednesday up 62 points, or 0.19%, the S&P 500 index closed up 0.21%, the Nasdaq Composite index closed down 0.01% and the Russell 2000 index closed down 0.34%.

There was $85 million in reported convertibles trading volume about one hour into the session and $400 million on the tape about one hour before the market close.

Pioneer Natural Resources Co.’s deep-in-the-money 0.25% convertible notes due 2025 were active with the equity sensitive notes moving in line with stock.

Twitter Inc.’s convertible notes continued to weaken as questions arise about the financing for Tesla Inc. CEO Elon Musk’s takeover of Twitter.

Spotify Technology SA’s 0% exchangeable notes due 2026 returned to focus with the notes down outright but holding up well as stock dropped double digits following earnings.

Pioneer in focus

Pioneer Natural Resources’ deep-in-the-money 0.25% convertible notes due 2025 were in focus on Wednesday.

The notes were changing hands at 216 versus a stock price of $229.64 early in the session, according to a market source.

They were changing hands at 220 versus a stock price of $233.02 in the late afternoon.

The equity-sensitive notes were moving in line with stock, a source said.

There was $18 million in reported volume.

Pioneer Natural Resources’ stock opened Wednesday in the red but closed with gains.

Stock traded to a low of $223.45 and a high of $233.75 before closing the day at $231.49, an increase of 1.22%.

There may have been some profit-taking in the name, a source said.

The oil and gas exploration company’s stock has been down alongside broader markets for the past week and half. Stock has dropped 9% since April 20.

However, it is up more than 20% year to date.

Twitter weaker

Trading activity in Twitter’s convertible notes tempered on Wednesday after dominating activity in the secondary space for much of the week.

However, the social media company’s notes continued to weaken on another red day for the company’s stock.

The 0% convertible notes due 2026 fell another 0.5 point outright.

They were changing hands at 94.875 versus a stock price of $48.72 in the late afternoon.

There was $18 million in reported volume.

The 0.25% convertible notes due 2024 were off another 0.25 point outright and were changing hands at 108.25 versus a stock price of $48.69 in the late afternoon.

Twitter’s stock traded to a low of $47.82 and a high of $49.26 before closing the day at $48.53, a decrease of 2.30%.

Twitter’s stock is now well below Musk’s takeout price of $54.20.

Questions have surfaced about Musk’s $21 billion equity commitment to be used to finance the deal.

Spotify’s earnings

Spotify’s 0% convertible notes due 2026 were lower on an outright basis in active trading after the audio streaming company reported earnings.

However, the notes continued to hold up well as the company’s equity hit a new 52-week low.

The 0% convertible notes were off 1.25 points outright as stock tanked 12%.

The notes were changing hands at 81.5 versus a stock price of $97.84 in the late afternoon.

The notes now carry a yield of 5.5%.

There was $13 million in reported volume.

Spotify’s stock traded to a high of $105.64 and a low of $95.74 before closing the day at $96.51, a decrease of 12.59%.

Spotify’s stock sank on Wednesday despite a large earnings beat.

The company reported earnings per share of €0.21 versus analyst expectations for a loss of €0.24.

Revenue was €2.66 billion versus analyst expectations for revenue of €2.62 billion.

While Spotify posted a large earnings beat, its forecast for paid subscribers in the second quarter fell short of expectations.

Mentioned in this article:

Pioneer Natural Resources Co. NYSE: PXD

Spotify Technology SA NYSE: SPOT

Twitter Inc. NYSE: TWTR

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