Morning Commentary: Accolade convertible notes sink as stock plunges post earnings

By Abigail W. Adams

Portland, Me., April 29 – The new day brought a new disaster du jour in the convertibles market as equity markets returned to the red following the latest spate of tech earnings.

The Dow Jones industrial average was down 390 points, or 1.15%, the S&P 500 index was down 1.75%, the Nasdaq Composite index was down 1.77% and the Russell 2000 index was down 0.77% shortly before 11 a.m. ET.

Accolade Inc.’s 0.5% convertible notes due 2026 were getting pummeled in high-volume activity as stock was nearly cut in half following earnings.

The 0.5% notes sank to 59.5 in early trading, a source said.

The small illiquid issue last traded on April 11 on a 74-handle.

The notes were mostly held by outright accounts.

However, they contracted 5 points dollar-neutral on a theoretical hedge of 50%.

There was $12 million in reported volume with the notes accounting for the lion’s share of the $74 million in reported volume about one hour into the session.

Accolade’s stock was changing hands at $5.73, a decrease of 48.19%, shortly before 11 a.m. ET.

Stock was nearly cut in half after the health care technology company reported earnings.

The company beat expectations with a loss per share of 51 cents versus analyst expectations for a loss of 52 cents and revenue of $93.8 million versus analyst expectations for revenue of $91.6 million.

However, stock tanked after the company cut its forward guidance and announced that it had lost a key customer, a source said.

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