(Bloomberg) — QXO Inc., which boasted an implied valuation of more than $90 billion at one point last week, hurt some investors late Monday when its thinly traded shares fell sharply.
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Shares of the investment firm built by Brad Jacobs plunged 81% to $11.25 each in after-market trading. The Jared Kushner-linked firm released millions of shares in a pair of private placements filed with the U.S. Securities and Exchange Commission, quickly creating selling pressure.
The fallout provided a dose of reality as the stock traded close to its implied value, based on the roughly $5 billion Jacobs raised. Late trading valued the company at about $8.6 billion on a fully diluted basis, a premium to its cash value, even though it had lost about $36 billion in paper value from Monday’s close.
QXO began with a $1 billion investment by a Jacobs-led group in Nasdaq-listed SilverSun Technologies Inc. The investors announced the deal in December, revealing plans to spin off its existing business among shareholders, leaving the remaining company as a kind of blank-check vehicle, an independent platform for acquisitions in an industry to be announced. Unlike a special purpose acquisition company, the new company will make more than one deal.
Jacobs revealed the name and industry, and the distribution of building materials, that same month. QXO later decided not to spin off Silversun and would retain its business.
Jacobs has built a war chest in recent months through private placements priced at about $9.14 a share, raising billions of dollars, filings show, even as the publicly traded stock soared to $290 a share in June.
Small investors helped send the company’s shares up 112% earlier this month, days after QXO announced a $620 million private placement, including $150 million from Kushner’s Affinity Partners. Former President Donald Trump’s son-in-law was also named to QXO’s board.
Monday’s filing significantly increased the number of shares available to about 400 million from about 665,000. The number of shares could increase further, as the private placement also gave buyers warrants. On a fully diluted basis, there could be about 890 million shares available for trading.
While the stock’s supposed 96% drop from its June 10 peak seems shocking, the scale of investors who lost may be small given the small amount of shares available to trade at that point. In the three months leading up to Monday’s filing, only about 35,000 QXO shares were traded daily.
(Updates with context in paragraphs 4 and 5.)
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