Okta convertibles fall outright, flat on swap; MongoDB tanks outright, up dollar-neutral

By Abigail W. Adams

Portland, Me., Sept. 1 – Trading activity in the convertibles secondary space was muted on the first trading day of the new month although several convertible issuers were active as their equities made outsized moves – to the downside and upside.

It was a choppy day for equities with indexes deep-in-the red early in the session as better-than-expected unemployment numbers and manufacturing growth data sent Treasuries into a tailspin.

While there was heavy selling early, buyers stepped in as the session progressed with equity indexes closing the day mixed.

The Dow Jones industrial average closed Thursday up 146 points, or 0.46%, the S&P 500 index closed up 0.30%, the Nasdaq Composite index closed down 0.26% and the Russell 2000 index closed down 1.18%.

There was $78 million on the tape about one hour into the session and $388 million in reported volume about one hour before the market close.

Okta Inc.’s convertible notes were in focus as stock plummeted following earnings where management discussed problems in the integration of its recently acquired Auth0.

While down outright, the notes were unchanged on swap.

MongoDB Inc.’s 0.25% convertible notes due 2026 plummeted outright as stock got crushed following earnings.

However, the notes improved dollar-neutral on the move down.

Nutanix Inc.’s 0.25% convertible notes due 2027 were up outright as stock skyrocketed double digits post-earnings.

The notes were flat to improved dollar-neutral based on the hedge used.

Okta’s earnings

Okta’s convertible notes sank on an outright basis but were largely flat dollar-neutral with stock crushed post-earnings.

Okta’s 0.375% convertible notes due 2026 sank 6 points outright with stock off more than 30%.

The notes were changing hands at 80 early in the session. They were trading on a 79-handle in the mid-afternoon.

However, the notes were trading in line on swap, a source said.

“They used to be a darling,” a source said, with the 0.375% notes trading as high as 151 in November 2021.

Okta’s 0.125% convertible notes due 2025 were also down 6 points outright.

The notes were seen at 87.5 early in the session and fell to 85.5 by late afternoon.

The notes were also flat dollar-neutral, a source said.

Okta’s stock traded to a low of $58.12 and a high of $69.34 before closing the day at $60.60, a decrease of 33.70%.

Stock tanked despite an earnings beat with the cyber-security company reporting losses per share of 10 cents versus analyst expectations for losses per share of 30 cents.

Revenue was $451.81 million versus analyst expectations for revenue of $431.46 million.

The company also raised its earnings guidance and reaffirmed its revenue forecast.

However, stock took a beating after management discussed some issues with the integration of its recent acquisition of Auth0.

MongoDB’s earnings

MongoDB’s 0.25% convertible notes due 2026 plummeted outright alongside stock following earnings.

The 0.25% convertible notes sank 50 points outright with stock down 25%.

The notes were seen at 140 early in the session.

They fell to 132 in the late afternoon.

MongoDB’s stock traded to a high of $272 and a low of $238.47 before closing the day at $241.11, a decrease of 25.32%.

Stock sank despite an earnings beat with the software database company reporting losses per share of 23 cents versus analyst expectations for losses of 28 cents.

Revenue was $303.7 million versus analyst expectations for revenue of $284.4 million.

However, forward guidance came in below expectations.

Nutanix’s earnings

Nutanix’s 0.25% convertible notes due 2027 were on the rise as the software company’s stock broke the trend and jumped double digits following earnings.

The 0.25% notes gained 5 points outright with stock up almost 30%.

They were changing hands at 80 in the late afternoon.

The notes were moving in line dollar-neutral on a heavy hedge, but those that played the notes on a lighter hedge saw an expansion, a source said.

Nutanix’s stock traded to a low of $20.98 and a high of $22.94 before closing the day at $22.34, an increase of 29.13%.

Stock soared after the software company reported losses per share of 17 cents versus analyst expectations for losses of 38 cents.

Revenue was $385.5 million versus analyst expectations for revenue of $355.3 million.

The company also issued guidance that beat estimates.

Mentioned in this article:

MongoDB Inc. Nasdaq: MDB

Nutanix Inc. Nasdaq: NTNX

Okta Inc. Nasdaq: OKTA

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