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Morning Commentary: Affirm convertible notes fall in early trading on earnings miss
By Abigail W. Adams
Portland, Me., Feb. 9 – The strong uptrend in Affirm Holdings Inc.’s 0% convertible notes due 2026 came to an end on Thursday with the notes falling in active trade as stock crumbled post-earnings.
The 0% notes fell 4 points outright with stock down more than 18% in early trade.
They were wrapped around 62 with the yield north of 12.5%, a source said.
The notes were among the most actively traded issues early in Thursday’s session with $6 million on the tape.
Affirm’s stock traded down to $12.88, a decrease of 19.63%, shortly before 11 a.m. ET.
Stock sank after the buy now pay later firm announced earnings that fell short of expectations.
Affirm announced losses per share of $1.08 versus the losses of 99 cents expected on revenue of $399.56 million versus the $416.11 million expected.
The company also announced that it was laying off about 19% of its workforce.
Affirm’s 0% convertible notes have made large gains amid the market rally over the past one and a half months.
The notes were trading on a 55-handle in early January.
The notes climbed more than 4 points outright in the post-Fed surge in growth stocks the previous week.
However, they gave back all outright gains from the previous week on Thursday.
While earnings dragged Affirm lower, it was a green day for equities with strong earnings from large cap companies and an unemployment report that came in above expectations lifting investor sentiment.
The Dow Jones industrial average was up 216 points, or 0.64%, the S&P 500 index was up 0.54%, the Nasdaq Composite index was up 0.75% and the Russell 2000 index was up 0.37% shortly before 11 a.m. ET.
There was $68 million in reported convertibles trading volume about one hour into the session with a wide range of names in play.
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