Peloton convertible notes in focus as stock tanks; SoFi, Luminar skyrocket outright

By Abigail W. Adams

Portland, Me., Jan. 20 – There was an uptick of activity in the convertibles secondary space on Thursday as the turbulence in equities continued.

While equity indexes notched gains of more than 1% early in the session, late-day selling again pushed indexes into negative territory with the Nasdaq Composite sinking further into correction territory.

The Dow Jones industrial average closed the day down 313 points, or 0.89%, the S&P 500 index closed down 1.11%, the Nasdaq Composite closed down 1.3% and the Russell 2000 index closed down 1.57%.

There was $88 million in reported convertible bond trading volume about one hour into the session and $575 million heading into the close.

Peloton Interactive Inc.’s 0% convertible notes due 2026 were in focus as stock crashed following news it was suspending production of its connected fitness equipment.

While the rebound in broader tech names was short lived, the equity of some convertible issuers saw outsized moves to the upside.

SoFi Technologies Inc.’s 0% convertible notes due 2026 and Luminar Technologies Inc.’s 1.25% convertible notes due 2026 skyrocketed on an outright basis alongside stock with both issues firmly above par.

Peloton in focus

Peloton’s 0% convertible notes due 2026 were in focus as stock crashed amid more bad news for the company.

The 0% convertible notes dropped 1.5 points outright as stock cratered more than 20% following news the company was suspending production of its connected fitness equipment.

The 0% notes were changing hands at 83.25 heading into the market close with the yield on the notes now 4.5%.

There was more than $32 million in reported volume.

The convertible notes have long traded for their yield with the conversion premium on the notes over 700%.

However, Peloton’s stock continued its downward trajectory, falling another 20% on Thursday.

The stock traded to a high of $32.64 and a low of $23.25 before closing the day at $24.22, a decrease of 23.93%.

Investor concern over the company’s growth increased following news the exercise and media company was suspending production of its connected fitness equipment due to weak demand.

While Peloton has been under pressure, there has been speculation that it may become an acquisition target.

SoFi gains continue

SoFi’s convertible notes continued to gain in active trading as stock extended its gains.

The 0% notes were up another 5 points outright as stock jumped more than 16% in intraday activity.

The 0% convertible notes were changing hands just shy of 102 versus a stock price of $15.36 early in the session, according to a market source.

They were trading at 103.5 versus a stock price of $15.69 in the late afternoon.

There was about $15 million in reported volume.

SoFi’s stock traded as high as $16.47 and as low as $14.01 before closing the day at $15, an increase of 9.41%.

The stock has gained more than 20% over the past two sessions on news the personal finance company passed regulatory hurdles to become a bank holding company.

Luminar improves

Luminar Technologies’ 1.25% convertible notes due 2026 also saw large price movement alongside stock.

The 1.25% notes rose more than 11 points with stock up as much as 18% in intraday activity.

The 1.25% notes were changing hands at 101.375 versus a stock price of $14.94 early in the session.

They traded as high as 106 versus a stock price of $16.70 in the late afternoon, according to a market source.

However, the notes came in as stock declined with late-day trades around 102.

Luminar’s stock traded to a high of $16.75 and a low of $14.61 before closing the day at $15, an increase of 11.52%.

Luminar’s stock surged following news Mercedes-Benz had signed a deal to use the company’s technology in its next generation of vehicles.

Mentioned in this article:

Luminar Technologies Inc. Nasdaq: LAZR

Peloton Interactive Inc. Nasdaq: PTON

SoFi Technologies Inc. Nasdaq: SOFI

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