Opendoor convertibles improve outright; Unity, Marathon Digital, DigitalOcean below par

By Abigail W. Adams

Portland, Me., Nov. 24 – There was an eclectic mix of convertible bonds on the tape on Wednesday as trading volumes dwindled heading into the Thanksgiving holiday.

While there was $113 million in reported convertible bond trading volume about one hour into the session, activity tapered off into the afternoon.

There was about $340 million on the tape about one hour before the market close.

While the S&P 500 index and Nasdaq Composite turned positive on Wednesday as many high-flyers hard-hit by the sell-off over the past two sessions staged a modest rebound, several recently priced convertible notes remained under pressure.

The Dow Jones industrial average closed the day down 9 points, or 0.03%, the S&P 500 index closed the day up 0.23%, the Nasdaq Composite closed up 0.44% and the Russell 2000 index finished up 0.19%.

While Unity Software Inc.’s 0% convertible notes due 2026 and DigitalOcean Inc.’s 0% convertible notes due 2026 were modestly improved on an outright basis, they continued to trade well below par.

Marathon Digital Holdings, Inc.’s 1% convertible notes due 2026 were largely unchanged outright with the notes continuing to trade around 96.

All three deals priced the previous week and initially performed well in the aftermarket.

Following Tuesday’s double-digit drop on an outright basis, Opendoor Technologies Inc.’s 0.25% convertible notes due 2026 were also slightly improved as stock staged a modest recovery.

Ouch

Several of the deals to price the previous week remained well below par on Wednesday, even with some improving outright.

Unity Software’s 0% convertible notes due 2026 rose about 1.25 points outright with stock up 3%.

The notes were changing hands at 98 versus a stock price of $181.29.

There was $11 million in reported volume about one hour before the market close.

Unity Software’s stock traded to a low of $173.01 and a high of $183.13 before closing the day at $181.81, an increase of 3.27%.

Factoring in Wednesday’s gains, stock has fallen more than 7% since the company priced the $1.5 billion issue at par on Nov. 16.

DigitalOcean’s 0% convertible notes due 2026 were also up about 1.25 points outright with stock up more than 2.5%.

The 0% convertible notes were changing hands at 95.75 early in the session. However, they rose to trade at 97 versus a stock price of $100.13 in the late afternoon.

There was about $7 million in reported volume.

DigitalOcean’s stock traded to a low of $94.10 and a high of $102.65 before closing the day at $101.53, an increase of 2.6%.

Stock has fallen more than 14.5% since the company priced the $1.3 billion issue at par on Nov. 15.

The notes traded as high as 107 the previous week as stock surged following the convertible notes offering.

However, stock plummeted more than 20% on Monday alone, dragging the convertible notes down with it.

While the stock of several high-flyers improved on Wednesday, Marathon Digital’s stock remained negative for the majority of Wednesday’s session. However, it was lifted into positive territory shortly before the closing bell.

The crypto-miner’s 1% convertible notes due 2026 also remained under pressure.

The 1% notes were changing hands at 96.675 versus a stock price of $50.79 early in the session.

There was about $4 million on the tape.

Marathon Digital’s stock traded to a low of $48.90 and a high of $52.65 before closing the day at $52.39, an increase of 0.52%

Marathon Digital priced a $650 million issue of the 1% convertible notes at par on Nov. 15. On Wednesday, the company announced that the $97.5 million greenshoe for the deal had been fully exercised, lifting the notes to $747.5 million.

The notes traded as high as 104 on their aftermarket debut.

However, Marathon Digital’s stock sold off alongside other high-flyers over the past few sessions.

Stock has dropped about 7% since the convertible notes priced.

Opendoor improves

Following Tuesday’s double-digit drop, Opendoor’s 0.25% convertible notes due 2026 improved alongside stock.

The 0.25% convertible notes were up about 1 point outright with stock up 2%.

The notes were changing hands at 111.375 versus a stock price of $51.99 early in the session.

There was $8 million in reported trading volume.

Opendoor’s stock traded to a low of $16.70 and a high of $17.47 before closing the day at $17.01, an increase of 1.8%.

Opendoor’s convertibles sank 13 points outright and contracted about 0.5 point dollar-neutral on Tuesday with stock off about 9%.

Mentioned in this article:

DigitalOcean Inc. NYSE: DOCN

Marathon Digital Holdings, Inc. Nasdaq: MARA

Opendoor Technologies Inc. Nasdaq: OPEN

Unity Software Inc. NYSE: U

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