Morning Commentary: Wolfspeed convertible notes jump post-earnings; equities mixed

By Abigail W. Adams

Portland, Me., Aug. 18 – Trading activity in the secondary space normalized on Thursday as activity in new paper tempered and attention shifted to the convertible notes of issuers that have seen outsized stock moves in recent sessions.

There was $100 million in reported volume about one hour into the session with Wolfspeed Inc. the name of the day.

The semiconductor parts manufacturer’s 0.25% convertible notes due 2028 spiked on an outright basis and expanded on a dollar-neutral basis as stock surged post-earnings.

The 0.25% notes shot past par for the first time since May. They traded up 14 points outright with stock up 25%.

The notes were changing hands at 110.375 versus a stock price of $108.11 early in the session.

The notes expanded about 1 point on the move up, a source said.

There was $19 million in reported volume.

Wolfspeed’s stock was seen at $108.31, an increase of 26.46%, shortly before 11 a.m. ET.

Stock surged after the company reported a large earnings beat.

Wolfspeed announced earnings per share of 2 cents versus analyst expectations for a loss of 10 cents.

Revenue was $228.5 million versus analyst expectations for revenue of $207.81.

Wolfspeed’s stock was among the top performers of equity markets on Thursday with equity indexes wavering between gains and losses early in the session.

The Dow Jones industrial average was down 85 points, or 0.25%, the S&P 500 index was down 0.03%, the Nasdaq Composite index was up 0.08% and the Russell 2000 index was up 0.16% shortly before 11 a.m. ET.

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