Perficient convertibles expand on debut; Peloton active; BigCommerce, Airbnb gain

By Abigail W. Adams

Portland, Me., Nov. 5 – It was an active day in the convertibles secondary space with the second new deal of the week making its aftermarket debut and earnings-related volatility sparking activity in outstanding issues.

There was $194 million in reported volume about one hour into the session and $700 million in reported volume about one hour before the market close.

New paper from Perficient Inc. accounted for the lion’s share of trading activity with the new paper making large gains on an outright and dollar-neutral basis.

Meanwhile, convertibles issuers continued to see outsized movements in stock following earnings.

Peloton Interactive Inc.’s 0% convertible notes due 2026 were down on an outright basis as stock dropped double-digits following the exercise company’s third-quarter earnings report.

However, Airbnb Inc.’s 0% convertible notes due 2026 and BigCommerce Holdings Inc.’s 0.25% convertible notes due 2026 were making gains as stock rose double-digits following earnings.

Perficient in demand

Perficient priced an upsized $330 million of five-year convertible notes after the market close on Thursday at par with a coupon of 0.125% and an initial conversion premium of 30%.

Pricing came toward the rich end of initial price talk for a coupon of 0% to 0.5% and at the rich end of talk for an initial conversion premium of 25% to 30%, according to a market source.

The new paper dominated activity in the secondary space and was making large gains on an outright and dollar-neutral basis.

The notes opened at 102 and continued their upward momentum as the session progressed.

The convertibles traded as high as 104 and were changing hands at 103.875 a little more than one hour into the session.

The 0.125% notes were seen changing hands at 103.5 versus a stock price of $148.08 in the late afternoon.

They expanded about 3.5 points on hedge, a source said.

There was more than $100 million in reported volume.

Perficient’s stock traded to a high of $153.28 and a low of $146.59 before closing the day at $148.30, a decrease of 0.36%.

Concurrently with the new offering, Perficient entered into privately negotiated transactions with holders of its 1.25% convertible notes due 2025 to exchange $190.7 million of the principal amount for $311.5 million in cash and 1,640,156 shares.

The majority of allocations in Perficient’s new offering went to holders that were swapping out of the 1.25% notes.

“People who wanted them had to pay up,” a source said.

Peloton’s earnings

Peloton’s 0% convertible notes due 2026 were active as stock dropped double-digits following third-quarter earnings.

The high-premium notes dropped about 4 points outright with stock off more than 33%.

The 0% notes were changing hands at 85.125 early in the session.

They were changing hands at 84.375 versus a stock price of $56.17 in the late afternoon.

The notes expanded about 3 points dollar-neutral on a delta of about 50% over the past three sessions, a source said.

However, on a 30% delta, the notes were moving in line dollar-neutral, a source said.

There was $26 million in reported volume about one hour before the market close.

Peloton’s stock traded to a high of $61.70 and a low of $55.21 before closing the day at $55.70, a decrease of 35.28%.

The 0% notes have long been in busted territory with stock down more than 60% since the convertible notes priced.

They largely now trade for their yield, which was about 4% on Friday, a source said.

Peloton reported losses per share of $1.25 versus analyst expectations for losses of $1.07. Revenue was $805.2 million versus expectations for $810.7 million.

The company also slashed its fiscal year forward guidance by about $1 billion with the current expected range now $4.4 billion to $4.8 billion.

Peloton held a staff meeting and announced it was freezing hiring across all departments on Friday, CNBC reported.

Airbnb in focus

Airbnb’s 0% convertible notes were making large gains on an outright basis alongside stock following a better-than-expected earnings report.

The 0% convertible notes rose about 4 points outright with stock up more than 12% during Friday’s session.

They were changing hands at 105 versus a stock price of $199.49 in the late afternoon.

There was about $20 million in reported volume.

Airbnb’s stock traded to a low of $185.94 and a high of $203.30 before closing the day at $201.62, an increase of 12.98%.

Airbnb’s stock traded to a low of $185.94 and a high of $203.30 before closing the day at $201.62, an increase of 12.98%.

Airbnb reported earnings per share of $1.23 versus expectations for earnings of 83 cents per share.

Revenue was $2.24 billion versus the $2.06 billion expected.

“Peloton, Airbnb – this is the reopening story,” a source said.

BigCommerce gains

BigCommerce’s 0.25% convertible notes due 2026 were among the major movers of Friday’s session with the notes and stock rising double-digits.

The 0.25% convertible notes rose more than 9 points outright to 107.5 bid, 107.75 offered early in the session.

They continued to climb alongside stock as the session progressed.

The notes were up 12 points outright to trade at 111.125 versus a stock price of $56.66 in the late afternoon.

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

BigCommerce’s stock traded to a low of $52.70 and a high of $59.38 before closing the day at $58.81, an increase of 28.27.

BigCommerce reported a third-quarter loss of 6 cents versus analyst expectations for a loss of 12 cents.

Revenue was $59.28 million versus the $58.06 million expected.

Mentioned in this article:

Airbnb Inc. Nasdaq: ABNB

BigCommerce Holdings Inc. Nasdaq: BIGC

Peloton Interactive Inc. Nasdaq: PTON

Perficient Inc. Nasdaq: PRFT

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