• EN

    • -+ 0.00%
    -+ 0.00%
    -+ 0.00%

    Why QXO (QXO) Is Down 6.3% After $1.15 Billion Apollo-Led Convertible Preferred Deal - And What's Next

    Simply Wall St·01/05/2026 21:14:40
    Listen to the news
    • On January 5, 2026, QXO, Inc. entered into an agreement to issue up to 114,500 Series C Convertible Perpetual Preferred Shares at US$10,000 each, raising up to US$1.15 billion from investors including Apollo-managed AP Quince Holdings (US$845,000,000) and Franklin Advisers (US$300,000,000), with closing targeted for July 15, 2026.
    • This preferred stock, carrying a 4.75% annual dividend and conversion into common shares at an initial US$23.25 price, is earmarked to fund acquisitions in building products distribution and comes with lock-up restrictions on investor sales until April 5, 2027.
    • We will now examine how this large Apollo-led convertible preferred investment, aimed at fueling acquisitions, may influence QXO’s investment narrative.

    These 14 companies survived and thrived after COVID and have the right ingredients to survive Trump's tariffs. Discover why before your portfolio feels the trade war pinch.

    What Is QXO's Investment Narrative?

    To own QXO today, you really have to believe in the acquisition story: that management can turn a loss-making, relatively young distribution platform into something meaningfully larger and more efficient by buying and integrating other building products distributors. The new US$1.15 billion Apollo and Franklin convertible preferred deal goes straight to the heart of that thesis, because the capital is explicitly tied to completing at least one “qualifying” acquisition by mid‑2026. In the near term, that boosts QXO’s funding capacity and may become the key catalyst investors focus on, alongside any signs that revenue growth is translating into a pathway toward profitability. At the same time, it adds fresh dilution risk on top of already heavy issuance, while QXO’s new board and management still have to prove they can execute a complex roll‑up at scale.

    However, investors should be aware of the dilution and execution risks that come with this deal. Despite retreating, QXO's shares might still be trading above their fair value and there could be some more downside. Discover how much.

    Exploring Other Perspectives

    QXO 1-Year Stock Price Chart
    QXO 1-Year Stock Price Chart

    Twelve members of the Simply Wall St Community have published fair value estimates for QXO that stretch from well under US$10 to more than US$70, highlighting how far opinions can diverge. Against that backdrop, the new Apollo‑led preferred financing ties much of QXO’s near term story to whether it can close and integrate sizable acquisitions using this US$1.15 billion pool of capital. Readers can compare these community views with their own assessment of that execution and dilution risk before forming a conviction.

    Explore 12 other fair value estimates on QXO - why the stock might be worth less than half the current price!

    Build Your Own QXO Narrative

    Disagree with this assessment? Create your own narrative in under 3 minutes - extraordinary investment returns rarely come from following the herd.

    • A great starting point for your QXO research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.
    • Our free QXO research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate QXO's overall financial health at a glance.

    Ready To Venture Into Other Investment Styles?

    These stocks are moving-our analysis flagged them today. Act fast before the price catches up:

    This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.