Ann: Afterpay upsizes and prices $1.5b convertible notes, page-71

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pastperformer

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27/02/21

09:23

Post #: 51382476
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Originally posted by SentryBox77: ↑

The popularity of this from the buyers side seems to have been misinterpreted on here. The buyers are getting something potentially very valuable - a guaranteed stop loss on running a short position, in size, from any level. So say APT goes crazy on the topside - trades to $200 in the next 6 months - owners of these notes can short sell at $200 knowing full well the worst they can ever do is make a $6 profit, and that only happens if it blows through $200 and doesn’t dip thereafter. If it does go back to $100 from there they can book the profit and they still have that guaranteed stop loss in place for the next 5 years - the potential of getting turns on that over that length of time is monumental. The kicker is the worst they can ever do out of it is get their money back at the end without any interest (assuming that APT isn’t at risk of being wound up in the next 5 years)The challenge for long/short traders with APT to this point is that the derivatives market is obscenely thin. You just cannot physically buy cover in anything in meaningful size. It’s not a surprise to me that this issue was massively over subscribed - I wish I were able to get some.

But it is also a great way for APT to get funding too - so really it’s a win/win for both sides.

For rank and file shareholders it’s good to get the funding cheap but the downside is that there will be more resistance in the SP probably starting from the ATH through to just beyond the strike - but it’s only $1.5 bio at this point, so probably just a bit of extra liquidity. If this type of raising were to continue and that figure grew to a large amount versus actively traded market cap it would be a big problem for the SP in terms of topside capacity.

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Yeah worked out terribly for Xero when it was $50 as well.

Price has never managed to recover from the .25% of issued shares on the conversion of the call option

APT Price at posting: $119.52 Sentiment: Buy Disclosure: Held
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Ann: Afterpay upsizes and prices $1.5b convertible notes, page-71

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