Convertibles secondary rips; Datadog gains; Lucid weaker; BeautyHealth bounces off lows

By Abigail W. Adams

Portland, Me., Nov. 10 – The convertibles secondary space was awash in green on Thursday as risk assets ripped higher following the release of October’s U.S. Consumer Price Index report, which reflected a higher deceleration of inflation than anticipated.

In a dramatic shift of market sentiment, equity indexes roared to the upside posting historic single-day gains.

The Dow Jones industrial average closed Thursday up 1,201 points, or 3.7%, the S&P 500 index closed up 5.54%, the Nasdaq Composite index closed up 7.35% and the Russell 2000 index closed up 6.11%.

Datadog Inc.’s 0.125% convertible notes due 2025 were “big winners” on Thursday with the notes making large gains on an outright and dollar-neutral basis.

Lucid Group Inc.’s 1.25% convertible notes due 2026 were weaker in heavy volume as stock recovered from its post-earnings plunge.

Beauty Health Co.’s (BeautyHealth) 1.25% convertible notes due 2026 pared their losses after trading down to an all-time low the previous session.

Datadog wins

Datadog’s 0.125% convertible notes due 2025 were “big winners” on Thursday with the notes making large gains on an outright and dollar-neutral basis as stock ripped alongside broader markets.

The 0.125% notes jumped more than 8 points outright with stock up more than 10%.

The convertibles were changing hands at 112.125 early in the session.

They were seen at 112.75 in the late afternoon.

The notes expanded 1.5 points to 1.75 points on hedge, a source said.

Datadog’s stock traded to a high of $78.69 and a low of $74.54 before closing the day at $76.52, an increase of 13.84%.

The surge comes the day after stock hit a new 52-week low of $66.45.

In addition to the broad market rally, stock jumped following reports that Datadog’s board chairman purchased 710,000 shares earlier in the week, a source said.

Lucid notes weaker

Lucid’s 1.25% convertible notes due 2026 were weaker in heavy volume as stock recovered from its post-earnings plunge.

The 1.25% convertible notes were unchanged outright as stock jumped more than 6% after setting a new 52-week low the previous session.

The 1.25% convertible notes were wrapped around 60 in the late afternoon with the yield 14.5%, a source said.

The notes continued to come in on hedge, a source said.

Lucid’s stock traded to a high of $12.34 and a low of $11.37 before closing the day at $12.11, an increase of 8.03%.

Stock pared its losses after plunging 17% the previous session following earnings.

While Lucid posted an earnings miss, Wednesday’s sell-off was largely a reaction to a reported reduction of vehicle reservations.

BeautyHealth improves

BeautyHealth’s 1.25% convertible notes due 2026 pared their losses on Thursday after hitting an all-time low the previous session.

The 1.25% notes gained 1.75 points outright with stock up 13%.

The notes traded as high as 75.75 early in the session although they gave back some of their gains and were seen changing hands at 75 in the late afternoon.

The yield on the notes was about 8.75%.

The convertibles improved on the move up.

BeautyHealth’s stock traded to a low of $9.12 and a high of $10.02 before closing the day at $9.54, an increase of 13.03%.

Stock surged after the company announced it was repurchasing 9.5 million shares for $100 million, ending the company’s $200 million share repurchase program initiated in September.

The gains come after stock plunged 20% to a new 52-week low the previous session, which dragged its 1.25% convertible notes to an all-time low of 73.

Mentioned in this article:

Beauty Health Co. Nasdaq: SKIN

Datadog Inc. Nasdaq: DDOG

Lucid Group Inc. Nasdaq: LCID

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