MicroStrategy volatility continues; Coinbase down; Super Micro falls on stock offering

By Abigail W. Adams

Portland, Me., March 19 – While the convertibles primary market remained dormant on Tuesday, the secondary space was active with large stock swings sparking activity in several names.

Equity indexes were mixed early in the session but popped into positive territory by the close with Treasuries either side of unchanged as the Federal Open Market Committee convened.

The Dow Jones industrial average closed Tuesday up 320 points, or 0.83%, the S&P 500 index closed up 0.56%, the Nasdaq Composite index closed up 0.39% and the Russell 2000 index closed up 0.54%.

There was $156 million in reported volume about one hour into the session and $575 million in reported volume about one hour before the market close.

MicroStrategy Inc. continued to live up to its high vol. assumptions as stock plunged early in the session but pared losses into the close.

MicroStrategy’s convertible notes were volatile alongside stock with the company’s latest 0.875% convertible notes due 2031 sinking further below par.

Coinbase Global Inc.’s 0.25% convertible notes due 2030 hit a new outright low on a weak day for stock as Bitcoin continued to pull back from recent heights.

Super Micro Computer Inc.’s 0% convertible notes due 2029 were also down outright as stock took a hit after the company announced a follow-on offering of 2 million shares.

MicroStrategy volatile

MicroStrategy continued to live up to its high vol. assumptions as stock plunged as much as 17% early Tuesday before paring losses into the close.

The stock move sent the company’s most recently priced 0.875% convertible notes due 2031 tumbling 10 points outright to 86 early in the session, a source said.

However, they also pared their losses into the close with the notes trading at 90.875 versus a stock price of $1,394 in the late afternoon, according to a market source.

There was $26 million in reported volume.

MicroStrategy’s 0.625% convertible notes due 2030 dropped 12 points outright early in the session but also pared losses as the session progressed.

The notes were changing hands at 111.25 versus a stock price of $1,288.56 early in the session.

They were trading at 116.375 versus a stock price of $1,437 in the afternoon.

There was $15 million in reported volume.

MicroStrategy’s stock traded to a low of $1,230.12 and a high of $1,450 before closing at $1,417.50.

MicroStrategy set a record and raised eyebrows when it re-tapped the convertibles market with its $525 million offering of 0.875% convertible notes due 2031, which priced on March 14. A greenshoe exercise later pushed the deal size to $603.75 million.

The offering came about one week after the company priced $800 million of 0.625% convertible notes due 2030 on March 5.

The offerings were marketed with a vol. assumption of 50%, an abnormality for the market with vol. typically capped at 45%.

“They certainly earned it,” a source said.

Proceeds from both offerings were used to purchase Bitcoin with MicroStrategy announcing that it had purchased 9,245 Bitcoin for $623 million over the past week, adding to its previous purchase of 12,000 coins at an average price of $68,477 for about $822 million.

MicroStrategy now owns 214,246 Bitcoin.

Coinbase’s new low

Coinbase’s 0.25% convertible notes due 2030 hit a new outright low on a weak day for stock as Bitcoin continued to pull back from recent heights.

The 0.25% convertible notes fell 6 points outright early in the session to trade on a 94-handle.

The notes recovered with stock as the session progressed and were trading at 96.125 versus a stock price of $228 in the late afternoon, according to a market source.

There was $16 million in reported volume.

Coinbase’s stock traded to a low of $216.16 and a high of $233.29 before closing at $230.12, down 3.96%.

Bitcoin continued to pull back from recent highs and was trading at $63,789.93, a decrease of 5.17%, shortly before 5 p.m. ET.

Super Micro lower

Super Micro’s 0% convertible notes due 2029 fell outright as stock sank after the company announced a follow-on stock offering.

The 0% convertible notes were down 6 points outright with stock off more than 10% in intraday activity.

The notes were trading at 104.375 versus a stock price of $896 early in the session, according to a market source.

They were wrapped around 105 with stock trading at $903 in the late afternoon.

There was $28 million in reported volume.

Super Micro’s stock traded to a low of $863 and a high of $925 before closing at $910.97, off 8.96%.

Stock was under pressure after the company announced plans to sell 2 million shares in a follow-on offering early Tuesday.

Mentioned in this article:

Coinbase Global, Inc. Nasdaq: COIN

MicroStrategy Inc. Nasdaq: MSTR

Super Micro Computer Inc. Nasdaq: SMCI

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