Chegg convertible notes contract, stock plummets; Expedia notes down; fuboTV active

By Abigail W. Adams

Portland, Me., May 3 – The convertibles secondary space was active on Tuesday as earnings-related volatility sparked activity in several outstanding issues.

Tuesday marked another choppy session for equities with indexes again wavering between gains and losses before closing in the green.

The Dow Jones industrial average closed up 65 points, or 0.20%, the S&P 500 index closed up 0.48%, the Nasdaq Composite index closed up 0.22% and the Russell 2000 index closed up 0.85%.

There was $464 million in reported volume about one hour before the market close with one name accounting for the majority of activity in the space.

Chegg Inc.’s convertible notes dominated the tape as stock plummeted after the education technology company reported earnings.

The convertible notes fell several points on an outright and dollar-neutral basis although they pared their losses as the session progressed.

Expedia Inc.’s 0% convertible notes due 2026 (Baa3/BBB-/BBB-) were also down in high-volume activity as stock sank double-digits after reporting results.

fuboTV’s 3.25% convertible notes due 2026 were active in the run-up to the company’s earnings report with some holders giving up on the name as the notes wallow in distressed territory.

Chegg in focus

Chegg’s convertible notes dominated the tape on Tuesday with the notes falling on an outright and dollar-neutral basis following earnings.

However, the notes pared their losses as the session progressed.

Chegg’s 0% convertible notes due 2026 fell 4 points outright early in the session to a 73-handle.

However, they regained some lost ground and were down about 2.75 points in the late afternoon.

The notes were changing hands at 74.5 versus a stock price of $17.79 about one hour before the market close.

The notes contracted 3 points early in the session but also reclaimed some lost ground and stood poised to close the day with a 2 point contraction, according to a market source.

There was $57 million in reported volume.

The 0.125% convertible notes due 2025 were down 4.375 points outright to trade at 84.5 early in the session.

The also regained their footing and were changing hands at 85.375 versus a stock price of $17.39 in the late afternoon.

While the notes were also contracted 3 points early in the session, they “clawed back” and closed the day relatively unchanged dollar-neutral, a source said.

There was $30 million in reported volume.

Chegg’s stock traded to a high of $18.18 and a low of $15.66 before closing the day at $17.42, a decrease of 30.07%.

Stock plummeted after the online education technology company reported earnings.

The company reported mixed earnings with a large beat on the bottom line but a slight miss on the top.

However, stock tumbled after the company lowered its forward guidance.

Chegg reported earnings per share of 32 cents versus analyst expectations for earnings of 24 cents.

Revenue was $202.24 million versus analyst expectations for revenue of $202.96 million.

The company reported that it is expecting to take a hit from rising inflation and lowered its full-year revenue guidance to $740 million to $770 million versus analyst expectations for revenue of $843 million.

The company has $1.6 billion in debt and a market cap of $2.2 billion, which makes bondholders nervous, a source said.

However, after digging further into earnings, Chegg’s convertible notes were attracting some high-yield buyers.

Expedia down outright

Expedia’s 0% convertible notes due 2026 were down in heavy volume as stock sank double digits following the online travel company’s earnings report.

The 0% notes were off 4.5 points outright with stock down more than 13% on Tuesday.

The notes were changing hands at 112.5 versus a stock price of $150.33 in the late afternoon.

There was $27 million in reported volume.

Expedia’s stock traded to a high of $169.16 and a low of $145.80 before closing the day at $150.31, a decrease of 14.02%.

Stock sank after the online travel company reported a wider loss than expected in the first quarter.

Expedia reported a loss per share of 47 cents versus analyst expectations for a loss of 27 cents.

Revenue was $2.25 billion versus analyst expectations for revenue of $2.27 billion.

fuboTV active

fuboTV’s 3.25% convertible notes due 2026 were active ahead of earnings with the notes stuck firmly in distressed territory.

The 3.25% notes remained on a 51-handle throughout Tuesday’s session.

They were trading at 51.75 about one hour before the market close, according to a market source.

The yield on the notes was 23%.

The live sport streaming service’s convertible notes are not equity sensitive.

However, stock closed Tuesday at $4.23, a decrease of 0.70%.

The company is set to report earnings on May 5 with analysts expecting a loss per share of 59 cents.

fuboTV was once a Reddit Army favorite with stock at $39.85 when the $402.5 million convertible note issue priced in January 2021.

Mentioned in this article:

Chegg Inc. NYSE: CHGG

Expedia Inc. Nasdaq: EXPE

fuboTV NYSE: FUBO

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