Morning Commentary: Wayfair convertible notes continue to skyrocket in early trading

By Abigail W. Adams

Portland, Me., Jan. 23 – Wayfair Inc. remained the name of the day on Monday with its stock and convertible notes continuing to skyrocket as the home decor e-commerce company embarks on a cost-cutting campaign.

Equity markets extended their gains early Monday with the Dow Jones industrial average up 240 points, or 0.72%, the S&P 500 index up 0.99%, the Nasdaq Composite index up 1.55% and the Russell 2000 index up 0.69% shortly before 11 a.m. ET.

Wayfair’s three tranches of convertible notes accounted for one-third of the $100 million in reported volume about one hour into the session.

After surging on an outright and dollar-neutral basis on Friday, the convertible notes continued their meteoric rise in early trading.

Wayfair’s 3.25% convertible notes due 2029 jumped another 16 points outright with stock up more than 20% early Monday.

The notes were changing hands at 115.5 versus a stock price of $58.10 early in the session, a source said.

They expanded another 1.5 points dollar-neutral.

The notes dominated activity in the secondary space with $21 million in reported volume.

The notes jumped 17 points outright and about 3.25 points dollar-neutral on Friday.

Wayfair’s 0.625% convertible notes due 2025 gained another 3 points outright.

The notes were trading at 78 versus a stock price of $58.22 early in the session, according to a market source.

The yield fell to 10.25%.

There was $6 million in reported volume.

The notes gained 4 points outright and 4.5 points dollar-neutral on Friday.

Wayfair’s 1% convertible notes due 2026 rose another 5.5 points outright.

The notes were seen at 76 versus a stock price of $58.95 early in the session.

The yield fell to 9%.

There was $3 million in reported volume.

The notes saw the greatest dollar-neutral gains on Friday and were lifted 6 points on hedge.

Wayfair’s stock was trading at $58.04, an increase of 24%, shortly before 11 a.m. ET on Monday.

Stock also shot up 20% on Friday with the company joining the chorus of tech companies announcing layoffs as a cost-saving measure.

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