Proofpoint trades actively post earnings; Tesla, Twitter see more action; Intel surges

By Rebecca Melvin

New York, Oct. 25 – Proofpoint Inc.’s 0.25% convertibles trading actively on Friday after the Sunnyvale, Calif.-based cyber security company reported earnings that sent its common shares down 5% in early action, a New York-based trader said.

The Proofpoint convertible, of which $920 million priced in August, was seen changing hands at 104.5 with shares around $116. The stock continued to slump during the session, closing down $10.65, or 8.6%, to $113.80.

Proofpoint’s third quarter exceeded revenue and earnings expectations. It reported a loss of $41.9 million, or 79 cents per share, compared to a loss of $36.1 million, or 69 cents per share in the year-earlier period. Adjusted earnings were 49 cents per share, and revenue for the quarter rose to $227.4 million from $184.2 million a year earlier.

Tesla Inc. saw a lot of follow-on trading action on Friday in two of its three convertible bonds. Those notes moved higher after a surge on Thursday on a surprisingly strong quarterly earnings report.

The Tesla 1.25% convertibles due 2021, or the B series, traded on Friday at 106 and 107 compared to 105ish on Thursday and from 99 prior to the earnings report.

The Tesla 2% convertibles due 2024, or the D series, traded up to 120.4 in the early going, rising from about 119 from the close on Thursday. It had jumped from 106 where it was trading prior to earnings.

The Tesla 2.375% convertibles due 2022, or the C series, were not seen in trade on Friday. They rose on Thursday to 114.68, which was up from 104ish in the previous session.

After an 18% climb in shares on Thursday, the Tesla common stock rose another $28.45, or 9.5%, to $328.13 on Friday, closing near its highs.

The company was able to pull off an earnings beat and showed strong revenue that came in just below expectations. It also showcased its first China-based factory, located near Shanghai, which is getting up and running ahead of schedule. Wedbush analyst Daniel Ives said that the quarter was “potentially game-changing.”

In fact, Tesla was the name of the week in terms of volume in U.S. convertibles. In terms of pricing, it spiked outright and expanded on a dollar-neutral basis on Thursday as shares surged to $300.00 per share. The stock kept moving on Friday and arbitrage players likely “took some pain,” a market source said. Short covering may have contributed to some of the stock move.

Twitter Inc.’s notes traded down on Thursday in active trade. That movement continued on Friday albeit at a slower pace. The Twitter 0.25% convertibles due 2024 slipped another point or more down to 95, and the 2021s traded to 95, which was off fractionally.

The social media company’s common stock shed another 45 cents, or 1.5%, to $30.30.

But Intel Corp.’s 3.25% convertible notes due 2039 surged along with the underlying shares of the chip giant. The notes traded up more than 18 points on an outright basis to more than 275.

Intel shares jumped $4.23, or 8%, to $56.46. The company posted a strong third-quarter result. Its adjusted earnings rose 1% for earnings per share of $1.42. Revenue held steady at $19.2 billion. The consensus estimate was for earnings of $1.24 per share on sales of $18.1 billion.

Pinduoduo Inc. was also a powerful mover on Friday. The 0% Pinduoduo convertibles due 2024 moved up several points to 116.6 as shares lifted. The stock of the Chinese e-commerce company ended up paring some of its initial gain but still closed up 88 cents, or 2.2%, to $40.84.

Pinduoduo priced $1 billion of the 2024 convertibles at the end of September.

Mentioned in this article:

Intel Corp. Nasdaq: INTC

Pinduoduo Inc. NYSE: PDD

Proofpoint Inc. Nasdaq: PFPT

Tesla Inc. Nasdaq: TSLA

Twitter Inc. Nasdaq: TWTR

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