Alphatec, Upwork convertible offerings eyed; Fastly volatile; Etsy down outright, up dollar-neutral

By Abigail W. Adams

Portland, Me., Aug. 5 – The convertible primary market returned to action after a nearly two-week hiatus with two new offerings on deck.

Alphatec Holdings Inc. plans to price $250 million in five-year convertible notes and Upwork Inc. plans to price $500 million in five-year convertible notes after the market close on Thursday.

The offerings looked cheap based on underwriters’ assumptions and were in demand during bookbuilding, sources said.

Meanwhile, there were large price movements in the secondary space on Thursday as convertibles issuers saw double-digit gains or losses following earnings.

Fastly Inc.’s 0% convertible notes due 2026 were in focus with the notes volatile.

While the notes were contracted on a dollar-neutral basis early in the session, they closed the day expanded.

Etsy Inc.’s 0.25% convertible notes due 2028 dropped outright but expanded dollar-neutral as stock dropped following earnings.

Datadog Inc.’s 0.125% convertible notes due 2025 jumped on an outright and dollar-neutral basis as stock soared following the company’s earnings report.

Alphatec eyed

Alphatec plans to price $250 million in five-year convertible notes after the market close on Thursday with price talk for a coupon of 0.5% to 1% and an initial conversion premium of 30% to 35%, according to a market source.

The lead underwriter was heard to be marketing the deal with assumptions of 500 basis points over Libor and a 43% vol., according to a market source.

Using those assumptions, the deal looked 2.51 points cheap at the midpoint of talk.

However, others felt the vol. should be 35%, which reduced the fair value of the deal to par, a source said.

Demand for the offering was heard to be robust.

The deal was partially wall-crossed with a large anchor order from an outright account, a source said.

Upwork eyed

In an overnight deal, Upwork plans to price $500 million in five-year convertible notes after the market close on Thursday with price talk for a coupon of 0% to 0.5% and an initial conversion premium of 37.5% to 42.5%, according to a market source.

The deal was heard to be in the market with assumptions of 325 bps over Libor and a 42% vol.

Using those assumptions, the deal looked about 2.42 points cheap at the midpoint of talk, a source said.

Other sources saw the deal as much as 4.5 points cheap at the midpoint of talk.

The deal was also heard to be in demand during bookbuilding.

Fastly volatile

Fastly’s 0% convertible notes due 2026 were volatile in high-volume activity on Thursday with the notes contracted on a dollar-neutral basis early in the session but expanded by the session’s end.

The 0% convertible notes were changing hands at 82.125 versus a stock price of $34.84 early in the session.

However, they pared their losses alongside stock as the session progressed and closed the day around 84.

The notes were seen contracted about 1 point dollar-neutral early in the session.

However, as stock bounced off its lows, the notes were seen expanded about 0.5 point heading into the market close.

Fastly stock traded to a low of $33.87 and a high of $42.27 before closing the day at $39.93, a decrease of 10.35%.

Stock tanked following the cloud computing service provider’s earnings report.

Fastly reported a loss per share of 15 cents versus analyst expectations for a loss of 17 cents.

Revenue was $85.1 million versus analyst expectations for revenue of $85.73 million.

While earnings were mixed, stock tanked after the company reported downbeat guidance due to a June 8 outage that caused a loss of customers.

The outage is projected to have a lasting negative effect on the company’s revenue.

Etsy down outright, expands dollar-neutral

Etsy’s 0.25% convertible notes due 2028 were down outright but up dollar-neutral as stock tanked following the company’s earnings report.

The 0.25% notes were changing hands around 106.25 in the late afternoon.

They were seen expanded about 0.75 point early in the session and 0.25 point in the late afternoon as stock traded off their lows.

Etsy stock traded to a low of $174.90 and a high of $193.35 before closing the day at $182.41, a decrease of 9.74%.

While Etsy beat on both the top and bottom lines, stock fell on weak guidance.

Etsy reported earnings per share of 68 cents versus analyst expectations for earnings of 64 cents.

Revenue was $528.9 million versus analyst expectations for revenue of $525.8 million.

However, the company forecast a slowdown of growth and projected third-quarter revenue of $500 million to $525 million versus analyst expectations for revenue of $527.5 million.

Datadog gains

Datadog’s 0.125% convertible notes due 2025 were posting large gains on an outright and dollar-neutral basis as stock soared following the company’s earnings report.

The 0.125% notes jumped almost 15 points outright.

They were changing hands at 159.25 in the late afternoon.

The notes expanded 1 point dollar-neutral, a source said.

Datadog stock traded to a low of $126.33 and a high of $135.38 before closing the day at $132.47, an increase of 15.26%.

Stock soared after the data analytics company reported a large earnings beat.

The company reported second-quarter earnings of 9 cents per share versus analyst expectations for earnings of 3 cents.

Revenue was $233.5 million versus analyst expectations for revenue of $212.5 million.

Mentioned in this article:

Alphatec Holdings Inc. Nasdaq: ATEC

Datadog Inc. Nasdaq: DDOG

Etsy Inc. Nasdaq: ETSY

Fastly Inc. NYSE: FSLY

Upwork Inc. Nasdaq: UPWK

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