While this coronavirus pandemic continues, employees need to "relocate" en masse. They have set up home offices and are now trying to make the best of a difficult situation. Working from home is the number 1 issue at the moment, and not just in the world of work: it is playing a key role on the stock market, too. Investors are on the lookout for companies whose solutions contribute to successful remote working. Leonteq is exploiting the momentum in this segment for a product offensive. The Zurich-based issuer is bringing together various shares from this sector as the underlying stocks for a number of soft-callable Multi Barrier Reverse Convertibles. It is not only in the underlyings that Leonteq is taking the current environment into account: due to the uncertain outlook, the issue is structured with a relatively short term of 9 months. Moreover, the barriers are only checked at the end of the term.
A total of seven underlying stocks from the home office spectrum were selected. These include Citrix, a company that has been dedicated to the digital workplace for over 20 years. According to the Florida-based company, more than 100 million users in 400,000 companies are using the various solutions today. Wall Street is confident that Citrix can acquire many more customers during the corona crisis. Shortly ahead of the end of Q1, the share is trading at 7.5% above the 2019 closing price. Meanwhile, the interim balance for the NASDAQ 100 Index is down close on one-fifth. Shares in Zoom Video Communications have practically doubled in value over the past year. Its app enables businesses to conduct video and audio conferences. This may involve discussions in small groups, but equally large-scale meetings with up to 1,000 video participants and 10,000 viewers. Cloud-based telephone, video and messenger services are Ringcentral’s business. Even before the coronavirus pandemic erupted, this growth company held out the prospect of further increases in revenue for 2020.
Even if the euphoria surrounding the three US shares were to abate, the barrier reverse convertible on Citrix, Ringcentral and Zoom allows a double-digit percentage yield. Regardless of the movement in the share prices, Leonteq is paying the coupon at 16% p.a. This opportunity comes with a risk buffer of 45%. So long as the three shares are trading above the barrier of 55% of the starting level at the closing fix, investors will receive the nominal sum back in full. If that is not the case, this partial protection lapses and the repayment is linked to the underlying stock with the weakest price performance. The same method of operation is being applied for a soft-callable Multi Barrier Reverse Convertible on DocuSign, Dropbox and Slack Technologies. While an identical barrier applies for this trio, the potential yield is actually higher at 21% p.a., reflecting the particularly high volatility of the underlying stocks. Take DocuSign, for instance: in the first half of March, shares in this digital documents and electronic signatures specialist fell by 20%. Since then, the NASDAQ share has made good on around two-thirds of these losses. A short-term v-curve similarly applies to Slack Technologies. On the operations side, the digital workflow platform provider is reporting a significant increase in interest in its services. The volumes of data being transported are similarly set to cause Dropbox to kick on. This well-known service allows documents to be shared and edited by multiple users.
Naturally, Logitech should not be missing from the pool of "working from home" shares. While the technology group modestly downgraded its forecast for 2020 at the start of March, citing the corona crisis, at that time its management may not have anticipated such a strong shift towards home office working. Accordingly, the mid cap’s share price has recently risen sharply. In the view of Wedbush Securities, Logitech ranks amongst the best-positioned companies in light of the global pandemic. It considers the products made by the company, based in western Switzerland, to be useful both for entertainment and for work. For that reason, the broker is anticipating significant growth in demand. As an example, Logitech cameras are currently being used in many video conferences conducted using Zoom. It is therefore fitting that this Swiss share, together with the NASDAQ-listed share, forms the basis for a further Barrier Reverse Convertible. The duo enables a guaranteed coupon of 9% p.a.
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