LivePerson convertible notes rebound; Lucid contracts post-earnings; MicroStrategy up

By Abigail W. Adams

Portland, Me., March 1 – The convertible bond primary market remained quiet on Tuesday with expectations for new issuance low as selling pressure returned to equities amid Russia’s military offensive against the Ukraine.

The Dow Jones industrial average closed the day down 597 points, or 1.79%, the S&P 500 index fell 1.55%, the Nasdaq Composite fell 1.59% and the Russell 2000 index fell 2.49%.

However, the convertibles secondary space was holding up well amid the downturn in equities with most names moving in line on a dollar-neutral, or hedged, basis, a source said.

Topical news and earnings-related volatility were the driving force of trading activity on a relatively quiet day, sources said.

LivePerson Inc.’s 0% convertible notes due 2026 continued to rebound from their post-earnings low as stock skyrocketed following news Starboard Value LP had taken a stake in the company.

MicroStrategy Inc.’s convertible notes also firmed as stock bucked the overall market trend and rose alongside Bitcoin.

However, Lucid Group Inc.’s 1.25% convertible notes due 2026 sank on an outright and dollar-neutral basis as stock tanked following disappointing earnings.

LivePerson in focus

LivePerson’s 0% convertible notes due 2026 were in focus on Tuesday as the notes nearly wiped out their post earnings loss.

The 0% convertible notes rose 5 points outright with stock up more than 17%.

They were changing hands at 77.75 versus a stock price of $23.80 in the late afternoon, according to a market source.

The notes continued to trade on a 77-handle heading into the market close.

LivePerson’s stock traded to a high of $24.57 and a low of $22.46 before closing the day at $23.52, an increase of 15.98%.

Stock was up sharply on Tuesday after Starboard Value disclosed it had taken an 8.5% stake in the company.

LivePerson’s 0% convertible notes tanked as stock hit a 52-week low of $16 last Thursday following disappointing earnings.

The notes traded down to a 71-handle and contracted 1 point dollar-neutral as stock cratered almost 25%.

However, stock has nearly recouped its post-earnings losses.

The 0% convertible notes were trading on a 78-handle heading into February.

MicroStrategy firms

MicroStrategy’s convertible notes continued their upward momentum as the company’s stock continued to rise with the Bitcoin rally.

The 0% convertible notes 2027 rose 2.5 points outright with stock up almost 5%.

They were changing hands just shy of 72 heading into the market close. The notes were also up 1 point outright on Monday.

The 0.75% convertible notes due 2025 traded up to 135 on Tuesday.

The notes closed last week at 122.5.

MicroStrategy’s stock traded to a high of $473.05 and a low of $449.69 before closing the day at $464.73, an increase of 4.91%.

The business intelligence company that invested heavily in Bitcoin has seen its stock rise more than 11% over the past week as Bitcoin has rallied.

Bitcoin has gained more than 15% over the past two sessions and was trading at $44,064.47 shortly after 5 p.m. ET.

The cryptocurrency has surged in response to sanctions on Russia.

Lucid Group contracts

Lucid Group’s 1.25% convertible notes due 2026 sank on an outright basis and contracted dollar-neutral as stock tanked post-earnings.

The 1.25% notes fell 5.5 points outright with stock off 13.77%.

The notes traded at 75 versus a stock price of $24.33 early in the session.

They were changing hands at 74.5 heading into the market close.

The notes contracted about 0.5 to 0.75 point dollar-neutral on the move down.

Lucid’s stock traded to a low of $23.38 and a high of $25.75 before closing the day at $24.99, a decrease of 13.77%.

Stock tanked after the EV startup reported earnings. Losses per share of 30 cents were largely in line with expectations.

However, revenue was $26.39 million versus the $59.87 million expected.

Lucid also missed expectations on delivery and lowered its production target to 12,000 to 14,000 vehicles from 20,000.

Mentioned in this article:

LivePerson Inc. Nasdaq: LPSN

Lucid Group Inc. Nasdaq: LCID

MicroStrategy Inc. Nasdaq: MSTR

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