Why Did QXO Stock Soar Today?

Brad Jacobs founded QXO (NYSE: QXO) with a vision to build the largest publicly traded distributor of building products in North America. The serial entrepreneur, who co-founded United Rentals and took multiple companies public, sought to unlock opportunity in the $800 billion building products distribution industry.

An announcement today that global asset management firm Apollo Global is leading a new $1.2 billion investment in QXO has sent shares of the company soaring. As of 11:45 a.m. ET, QXO stock was trading at the morning high, up 20.2%.

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QXO has an acquisition deadline

Jacobs has made one large acquisition as part of the quest to achieve his target for QXO to reach $50 billion in annual revenues within the next decade, primarily through an acquisition strategy. That deal for Beacon Roofing Supply was valued at about $11 billion and closed last April.

Now QXO has a new influx of cash to help with future acquisitions. The agreement announced today is for the Apollo-led group to invest $1.2 billion in QXO through a fresh issuance of convertible preferred shares. The preferred stock has an initial conversion price of $23.25 per share. That's 18% higher than QXO's Friday closing price. There's also another reason, however, that investors are driving the stock surge today.

One qualification is that the investment, which will pay a 4.75% annual dividend, be used to fund one or more qualifying acquisitions by July 15, 2026. That helps ensure QXO continues to grow, and investors should appreciate this aspect of the deal.

Howard Smith has positions in QXO. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.