Morning Commentary: Affirm convertible notes decline in early trading post earnings

By Abigail W. Adams

Portland, Me., Nov. 9 – The convertibles primary market remained dormant on Wednesday with prospects for new issuance before the week comes to a close low.

There are whispers of deals in the pipeline; however, earnings and fragile markets have prevented potential issuers from coming to the market.

There were little signs that equity markets were stabilizing on Wednesday with indexes firmly in the red with the outcome of U.S. midterm elections still uncertain and October’s Consumer Price Index report out on Thursday.

The Dow Jones industrial average was down 292 points, or 0.87%, the S&P 500 index was down 0.94%, the Nasdaq Composite index was down 1.26% and the Russell 2000 index was down 1.42% shortly after 11 a.m. ET.

Trading activity in the secondary space remained light with earnings-related volatility continuing to move the market.

Affirm Holdings Inc.’s 0% convertible notes due 2026 were in focus early Wednesday as stock plummeted more than 18% post earnings.

The 0% convertible notes sank 3 points outright.

The notes were changing hands at 59.75 in early trade.

The high-premium notes “are pretty much just pure bond now,” a source said.

However, some may still play the name on hedge.

Affirm’s stock traded down to $12.57, a decrease of 19.57%, shortly before 11 a.m. ET.

The buy-now pay-later company beat analyst expectations with fiscal first-quarter losses per share of 86 cents versus analyst expectations for losses of 88 cents and revenue of $361.62 million versus analyst expectations for revenue of $360.47 million.

However, Affirm slashed its forward guidance with the company now expecting $400 million to $420 million in revenue in the fiscal second quarter versus the $434 million analysts had expected.

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