Earnings in focus; Dropbox, Bloom Energy convertibles fall; Coinbase, Shockwave gain

By Abigail W. Adams

Portland, Me., Feb. 16 – The convertibles primary market saw its second consecutive week with no new issuance, a disappointment to many with demand from the buyside strong.

While several deals were heard to be in the works, they have yet to materialize.

Refinancings will be the driving force of issuance once the primary market reactivates with the need for capital otherwise low, a source said.

However, refinancing deals “aren’t overly exciting,” the source said. “People are bummed.”

As market players awaited new paper, the secondary space remained active with earnings-related volatility continuing to spark large movements in the space.

Equity indexes were again in the red following the latest Producer Price Index report, which came in hotter-than-expected and supported a higher-for-longer rate scenario.

The Dow Jones industrial average closed Friday down 145 points, or 0.37%, the S&P 500 index closed down 0.48%, the Nasdaq Composite index closed down 0.82% and the Russell 2000 index closed down 1.31%.

There was $82 million in reported volume about one hour into the session and $400 million on the tape in the late afternoon – an above average amount for a Friday before a long weekend, a source said.

Dropbox Inc.’s convertible notes dominated the tape with the notes falling outright as stock plunged after earnings.

Bloom Energy Corp.’s 3% convertible notes due 2028 also sank on an outright and dollar-neutral basis with stock hammered post-earnings.

However, Coinbase Global, Inc.’s 0.5% convertible notes due 2026 were on the rise on an outright and dollar-neutral basis on the heels of a strong earnings report.

Shockwave Medical Inc.’s 1% convertible notes due 2028 also made large gains after posting earnings results.

Dropbox crumbles

Dropbox’s 0% convertible notes due 2028 and 0% convertible notes due 2026 sank outright as stock plunged after earnings.

The 0% convertible notes due 2028 sank 12 points outright with stock down almost 20%.

The notes were trading at 96.375 early in the session.

They were changing hands at 95.375 in the late afternoon.

There was $20 million in reported volume.

Dropbox’s 0% convertible notes due 2026 were down 7 points outright and were trading at 95.75 early in the session.

They fell to 94.875 in the late afternoon.

There was $30 million in reported volume.

Dropbox’s stock traded to a low of $24.62 and a high of $27.98 before closing down 22.93% at $25.08.

While Dropbox beat expectations on earnings, stock sank after weak guidance and a decrease in users.

Dropbox reported earnings per share of 50 cents versus the 48 cents expected.

Revenue was $635 million versus the $632.5 million expected.

Several analysts downgraded the company’s stock following the earnings results.

Bloom Energy pressured

Bloom Energy’s 3% convertible notes due 2028 sank outright and contracted dollar-neutral as stock got hammered following earnings.

While the company’s 2.5% convertible notes due 2025 were lower outright, they improved on hedge with the market expecting a refinancing of the notes, a source said.

The renewable energy company’s 3% convertible notes due 2028 fell 9 points outright with stock off almost 20%.

They were trading at 83.75 in the late afternoon.

The notes contracted 0.5 point to 1 point dollar-neutral on the move down, a source said.

The 2.5% convertible notes due 2025 were off 6 points outright in light volume.

They were trading at 101.75 in the late afternoon.

Bloom Energy’s stock traded between $8.98 and $9.95 before closing at $9.88, off 17.46%.

Bloom Energy was under pressure after the company reported a large earnings miss.

The company reported earnings per share of 7 cents versus the 10 cents expected.

Revenue was $356.92 million versus the $474.67 million expected.

Coinbase rises

Coinbase’s 0.5% convertible notes due 2026 were on the rise on an outright and dollar-neutral basis after besting expectations with earnings.

The 0.5% convertible notes added 4 points outright with stock up more than 8%.

The convertibles were changing hands at 95.625 in the late afternoon.

The notes expanded about 0.5 point dollar-neutral on the move up, a source said.

Coinbase’s stock traded to a low of $178.80 and a high of $193.64 before closing at $180.31, up 8.84%.

Stock was on the rise after the crypto-trading platform posted a large earnings beat.

Coinbase reported earnings per share of $1.04 versus analyst expectations for earnings per share of 20 cents.

Revenue was $953.8 million versus the $818.4 million expected.

Shockwave gains

Shockwave’s 1% convertible notes due 2028 made large gains as stock shot up double digits following earnings.

The 1% convertible notes added 9 points outright with stock up 11%.

The notes were trading at 114.25 in the late afternoon and expanded about 1 point dollar-neutral on the move up, a source said.

Shockwave’s stock traded to a low of $247.87 and a high of $270.87 before closing at $262.66, up 11.15%.

Shockwave reported earnings per share of $1.16 versus the 92 cents expected. Revenue was $203 million, which also beat expectations.

Mentioned in this article:

Bloom Energy Corp. NYSE: BE

Coinbase Global, Inc. Nasdaq: COIN

Dropbox Inc. Nasdaq: DBX

Shockwave Medical Inc. Nasdaq: SWAV

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