Lyft convertibles sink outright; Uber notes active; Akamai down in line with stock

By Abigail W. Adams

Portland, Me., May 4 – It was a historic day for markets as the Federal Reserve announced its widely anticipated 50 basis point rate increase and the pace of its balance sheet runoff.

Equity indexes were indecisive leading into Federal Reserve chair Jerome Powell’s press conference with a round of selling following the initial announcement.

However, buyers were in full force following the press conference with indexes each notching nearly 3% gains.

The Dow Jones industrial average closed Wednesday up 932 points, or 2.81%, the S&P 500 index closed up 2.99%, the Nasdaq Composite index closed up 3.19% and the Russell 2000 index closed up 2.59%.

“The market liked that there’s not going to be a 75 bps rate increase,” a source said.

The convertibles secondary space was quiet early in the session as the market awaited the Federal Reserve’s announcement.

However, there was an uptick of activity as equities surged into the close.

While activity increased into the close, trading activity remained driven by earnings-related volatility.

Lyft Inc.’s 1.5% convertible notes due 2025 were the name of the day with the notes sinking outright as stock cratered post-earnings.

Uber Technologies Inc.’s 0% convertible notes due 2025 were active but relatively unchanged after the company announced earnings prior to the market open, earlier than anticipated.

Akamai Technologies Inc.’s 0.125% convertible notes due 2025 were down outright but unchanged dollar-neutral in active trading following another earnings disappointment.

Lyft’s earnings

Lyft’s 1.5% notes were firmly in the spotlight on Wednesday as the notes sank outright in heavy volume as stock cratered post-earnings.

The 1.5% convertible notes fell 15 points outright as stock dropped more than 30%.

The notes were changing hands at 93, the first time the notes have traded below par since 2020.

However, they regained some ground into the close to end the day at 94.375.

The notes were seen expanded about 0.75 point on a 60% hedge early in the session, a source said.

However, they were seen as contracted 2.5 points in the late afternoon.

Lyft’s credit blew out following earnings with spreads widening 150 bps, a source said.

Lyft’s stock traded to a high of $22.46 and a low of $20.02 before closing the day at $21.56, a decrease of 29.91%.

Lyft’s stock was down despite a large earnings beat.

The ride sharing company reported earnings of 7 cents per share versus analyst expectations for a loss of 7 cents per share and revenue of $875.58 million versus the $845.91 million expected.

However, stock cratered after the company missed expectations on active riders and issued weak guidance.

The company is projecting $1 billion in revenue in the second quarter versus analyst expectations for revenue of $1.7 billion.

Uber active

Uber’s 0% convertible notes due 2025 were active but relatively unchanged following Lyft’s earnings with the company reporting post-close.

The 0% convertible notes traded as low as 83 on Wednesday but pared their losses and were changing hands at 84.875 as stock regained some ground heading into the market close.

While the notes were weaker outright, they were unchanged dollar-neutral on the stock move, a source said.

Uber’s stock traded to a high of $28.40 and a low of $25.90 before closing the day at $28.12, a decrease of 4.58%.

Uber reported a loss per share of 10 cents versus the 11 cents analysts expected. Revenue was $6.85 billion versus the $6.10 billion expected.

While the company reported a loss, Uber did not report the same driver supply issues as rival Lyft.

Akamai’s results

Akamai’s 0.125% convertible notes due 2025 were lower outright but unchanged dollar-neutral following earnings.

The 0.125% notes fell 10 points outright with stock down more than 12% in intraday activity.

The notes traded down to a 117-handle.

While weaker outright, the notes were unchanged dollar-neutral.

“They held up,” a source said. “They did exactly what they were supposed to do.”

However, with no expansion following the stock move, the notes were not performing well either.

Akamai’s stock traded to a high of $104.16 and a low of $97.65 before closing the day at $102.76, a decrease of 9.70%.

Akamai missed expectations in its first-quarter report with earnings per share of $1.39 versus analyst expectations for earnings of $1.42.

Revenue was $903.65 million versus analyst expectations for revenue of $904.89 million.

Mentioned in this article:

Akamai Technologies Inc. Nasdaq: AKAM

Lyft Inc. Nasdaq: LYFT

Uber Technologies Inc. NYSE: UBER

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