High-flying QXO wipes out $36 billion in paper value in minutes

(Bloomberg) — QXO Inc., a company that at one point last week boasted an implied valuation of more than $90 billion, let down some investors late Monday as its thinly traded shares fell sharply used to go.

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Shares of the Brad Jacobs-built investment vehicle fell 81% to $11.25 each in aftermarket trading. The Jared Kushner-linked company unlocked millions of shares by registering a pair of private placements with the U.S. Securities and Exchange Commission, quickly 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, but unlike a special purpose acquisition company, it can use its capital to close more than one deal.

Late trading valued the company at about $8.6 billion on a fully diluted basis, a premium to its cash value, although it lost about $36 billion in paper value as of Monday’s close.

Jacobs’ company has built up a war chest in recent months through private placements priced at roughly $9.14 per share, raising billions of dollars, the filings show, even as its publicly traded shares rose to $290 each in June .

Retail investors fueled a 112% surge in shares earlier this month, days after QXO announced it had secured a $620 million private placement, including $150 million from Kushner’s Affinity Partners. Former President Donald Trump’s son-in-law was also asked to join QXO’s board of directors.

Monday’s filing dramatically increased the pool of available shares from nearly 665,000 to about 400 million. The number of shares could become even larger, as the private placement also provided buyers with warrants. On a fully diluted basis, there could be almost 890 million shares available for trading.

While the implied 96% decline from the June 10 peak may seem shocking, the pool of investors suffering losses is likely small given the small number of shares available for trading at the time. In the three months leading up to Monday’s filing, only about 35,000 QXO shares changed hands each day.

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