SolarCity convertibles drop after disappointing outlook; tech names flat; Euronet sinks

By Rebecca Melvin

New York, Feb. 10 – SolarCity Corp.’s convertibles dropped on both an outright and swap basis as the underlying equity fell 29% on Wednesday after the San Mateo, Calif.-based solar panel company guided for a bigger-than-expected loss for its current quarter.

SolarCity’s convertible bonds contracted several points in very active trade, a New York-based trader said.

Elsewhere, the convertibles of SanDisk Corp. and LinkedIn Corp. were trading about flat on a hedged basis, a trader said.

In biotechnology names, “everything saw a bit of a bounce, but there were low volumes across the board,” a second trader said.

On earnings, Euronet Worldwide Inc.’s 1.5% convertibles due 2044 dropped 10 points to 103.8, according to a market source, as shares of the Leawood, Kan.-based electronic payments provider fell $10.71, or 16%, to $57.93.

Euronet reported fourth-quarter net income of $33.5 million, or $0.61 per share, compared to net income of $30.1 million, or $0.55 per share, in the year-earlier period. Adjusted earnings of $0.92 per share were shy of estimates by a penny. But revenue was significantly below estimates, coming in at $470.6 million, or 2% higher than a year ago, compared to the consensus estimate of $502 million.

Looking ahead, Euronet said that first-quarter earnings per share was in line with expectations.

Tesla Motors Inc.’s convertibles were not noted in trade on Wednesday ahead of quarterly results reported after the market close.

But the Palo Alto, Calif.-based electric car maker reported a fourth-quarter adjusted loss of $0.87 per share on revenue of $1.75 billion when analysts expected a profit of $0.10 on $1.79 billion in revenue.

The loss was much worse than expected, but the company also reported better delivery guidance of 80,000 to 90,000 vehicles in 2016, and Tesla shares popped 10% in after-hours action.

Twitter Inc. also reported results after the market close that met expectations but also a sequential decline in users, which sent shares down 11% in after-hours action.

Twitter reported fourth-quarter earnings of 16 cents per share on $710 million in revenue. Analysts had expected Twitter to report earnings of about 12 cents per share on $710 million in revenue. Twitter’s 0.25% convertibles due 2019 were last at 85.5.

Post Holdings Inc.’s convertibles were up amid a continuing lift in the underlying shares of the St. Louis-based cereal maker after the company reported earnings that beat estimates on Friday. Post shares gained $3.96, or 6%, to $66.64 on Wednesday.

Post also reported revenue that was higher but fell short of expectations. Post’s 2.5% convertibles were seen higher at 127.25 from 120.5, according to a market source. And the Post 5.25% convertibles were up at 123.8 from 117.3.

The oil patch remained abysmal, with another dip, leaving crude with a $27.00 per barrel handle for West Texas Intermediate for March delivery.

Chesapeake Energy Corp.’s 2.5% convertibles, which had been a major focus of trade on Monday and Tuesday, was quiet with the last trade on the Trace tape at 21.5. Chesapeake shares were down another 13% at $1.70 at the market close.

SolarCity ‘implodes’

SolarCity reported better-than-expected results for the just-concluded quarter but offered weaker guidance on the current quarter.

SolarCity’s newer 1.625% convertibles were quoted at 52 bid, 54 offered in the early going and were seen at the close at about 54.50, which was down from about 61 previously.

SolarCity’s older 2.75% convertibles fell to the low to mid 60s from 72.

SolarCity’s shares fell $7.72, or 29%, to $18.63.

“SolarCity was pretty active” and down a couple of points, or as many as 3 points, a trader said.

Given that SolarCity “imploded,” it was essentially the focus of early trade.

The company’s residential installations have been strong, but commercial installations have been weaker than expected.

For the period ended Dec. 31, SolarCity reported a profit of $4.63 million, compared to a loss of $3.6 million for the year-earlier period. Excluding one-time items, the company lost $2.37 per share. Analysts had forecast a loss of $2.59 per share.

Revenue gained 61% to $115.5 million, which was better than the $105.6 million of revenue that analysts had expected.

For the current quarter, SolarCity said it expects a loss of $2.55 a share to $2.65 a shares, which is greater than the $2.36 a share that analysts had forecasted.

Mentioned in this article:

Chesapeake Energy Corp. NYSE: CHK

Euronet Worldwide Inc. Nasdaq: EEFT

LinkedIn Corp. Nasdaq: LNKD

Post Holdings Inc. Nasdaq: POST

SanDisk Corp. Nasdaq: SNDK

SolarCity Corp. Nasdaq: SCTY

Tesla Motors Inc. Nasdaq: TSLA

Twitter Inc. Nasdaq: TWTR

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