High-Flying QXO Erases $36 Billion in Paper Value in Minutes

(Bloomberg) -- QXO Inc., a company that had boasted an implied valuation of more than $90 billion at one point last week, burned some investors badly late Monday when its thinly-traded shares spiraled sharply downwards.

Shares of the investment vehicle built by Brad Jacobs sank 81% to $11.25 each in after-market trading. The Jared Kushner-linked firm unlocked millions of shares by registering a pair of private placements with the US Securities and Exchange Commission, swiftly creating selling pressure. 

The fallout offered a dose of reality as the stock traded closer to its implied value, based on the roughly $5 billion Jacobs has raised. QXO is similar to a blank-check vehicle, though unlike a special purpose acquisition company, it can use its capital to strike more than one deal.

The late trading valued the company at roughly $8.6 billion on a fully diluted basis, a premium to its cash value, though it shed some $36 billion in paper value from Monday’s close.

Jacobs’ company has built a war chest in recent months via private placements priced at roughly $9.14 per share, bringing in billions of dollars, filings show, even as the publicly-traded stock surged as high in June as $290 apiece.

Small-time investors fueled a 112% jump in the stock earlier this month, days after QXO announced it had brought in a $620 million private placement that included $150 million from Kushner’s Affinity Partners. The son-in-law of former president Donald Trump was also tapped to join QXO’s board of directors.

Monday’s filing dramatically increased the pool of available shares to about 400 million from close to 665,000. The share count may grow even larger, as the private placement also gave buyers warrants. On a fully diluted basis, there could be nearly 890 million shares available for trading.

While the stock’s implied 96% drop from the June 10 peak appears jarring, the range of investors left with losses is likely small given the tiny amount of shares that were available for trading at that point. In the three months before Monday’s filing, only about 35,000 QXO shares changed hands on a daily basis.

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