• Investing
  • Stock
  • Economy
  • Editor’s Pick
Portfolio Performance Today
Stock

Here’s why private equity stocks are crashing

by April 6, 2025
by April 6, 2025

Most American stocks crashed last week as concerns about Donald Trump’s tariffs caused shockwaves in the financial market. Technology stocks were among the top laggards as the tariff issue coincided with concerns about the artificial intelligence industry. 

Private equity stocks were also some of the worst performers in the S&P 500 index. This article explores why these stocks crashed, and whether it is safe to buy the dip.

Private equity stocks have crashed

Top companies in the private equity industry plunged last week as the market reacted to Donald Trump’s Liberation Day tariffs. Apollo Global Management (APO) stock price crashed by 21%, making it one of the top-ten laggards in the S&P 500 index during the week. 

KKR stock price dropped by 20.7%, while Blackstone fell by 13%. Other companies in the industry, like Carlyle, Ares Management, and Blue Owl Capital also dropped by double digits. 

Portfolio companies to be exposed to tariff risks

The first main reason why private equity stocks crashed is the Liberation Day tariffs that Trump announced on Wednesday. His tariffs include a global minimum rate of 10%, with some countries seeing rates of over 50%.

These tariffs will largely hit most companies, whether they do business in the US or not. This includes companies that these private equity companies own. 

However, the direct impact of tariffs on these private equity companies will be limited because of how they make their money. Most of these firms make most of their cash from their assets under management.

For example, Blackstone made $1.648 billion from management and advisory fees in the fourth quarter. It then made $240 million in incentive fees, making it a smaller part of its business. 

However, a recession can still expose these companies to risk, since they have become large players in the private credit industry. In private credit, these firms provide loans to companies across different sectors. The risk is where these recipients go out of business during a recession.

Difficulty in exits

The other reason why private equity stocks have crashed is that the ongoing market conditions are not ideal for exits. An exit is a situation where PE companies realize their investments. This typically happens through initial public offerings (IPOs) and sales.

PE companies now hold over 29,000 companies worth $3.6 trillion that they hope to exit, a difficult thing during a period of heightened risks. 

Their hope was that the Trump administration would usher in a period of deregulation and low inflation, which would fuel more activity, which has not happened.

Is it safe to buy private equity stocks dip?

The ongoing stock market crash has affected companies in the private equity industry. Still, there are chances that these companies will bounce back once the market moves out of the fear zone. 

One potential reason is that these companies now sit on $2.8 trillion in dry powder, a figure that refers to cash raised but not spent. It has become difficult for these companies to buy firms because of the market valuations. Therefore, these firms may use the dip to buy good companies at a lower price. In a note, one Hamilton Lane analyst said:

“History shows clearly that those are the periods when private markets, particularly private equity, outperform by the greatest amount.”

Further, these private equity companies have been in the business for decades. They have gone through worse market conditions before, including during the pandemic and the Global Financial Crisis.

The post Here’s why private equity stocks are crashing appeared first on Invezz

0 comment
0
FacebookTwitterPinterestEmail

previous post
PepeX poised for 250% presale surge while PEPE falls 75% in market shift
next post
Top 4 S&P 500 index stocks to buy the dip amid the crash

Related Posts

DAX Index analysis ahead of Porsche, Adidas, BMW...

July 28, 2025

Top catalysts for the Nifty 50 and Sensex...

July 28, 2025

Asian markets open: Nikkei falls, Samsung rises 3.5%;...

July 28, 2025

Panama Canal ports deal faces uncertainty as CK...

July 28, 2025

CAC 40 Index forecast ahead of Kering, Airbus,...

July 28, 2025

European stocks hit 4-month high on US-EU trade...

July 28, 2025

EU-US trade deal: 15% tariff, $750B energy purchase...

July 28, 2025

Alibaba enters AI wearables race with smart glasses...

July 28, 2025

Trump gives ’50-50 chance’ for EU trade deal...

July 27, 2025

Japan’s $550B investment could back Taiwan chip plants...

July 27, 2025

Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.

By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

Recent Posts

  • Which Crypto Tokens are Securities?

    July 28, 2025
  • What’s Wrong With Boeing?

    July 28, 2025
  • New Study: California’s $20 Minimum Wage Killed 18,000 Restaurant Jobs

    July 28, 2025
  • What’s Wrong With Boeing?

    July 28, 2025
  • New Study: California’s $20 Minimum Wage Killed 18,000 Restaurant Jobs

    July 28, 2025
  • Asimily Launches Tools to Make Business’ IoT Security Easier to Achieve

    July 28, 2025

Editors’ Picks

  • 1

    Meta executives eligible for 200% salary bonus under new pay structure

    February 21, 2025
  • 2

    Walmart earnings preview: What to expect before Thursday’s opening bell

    February 20, 2025
  • 3

    New FBI leader Kash Patel tapped to run ATF as acting director

    February 23, 2025
  • 4

    Anthropic’s newly released Claude 3.7 Sonnet can ‘think’ as long as the user wants before giving an answer

    February 25, 2025
  • 5

    Nvidia’s investment in SoundHound wasn’t all that significant after all

    March 1, 2025
  • 6

    Cramer reveals a sub-sector of technology that can withstand Trump tariffs

    March 1, 2025
  • 7

    Elon Musk says federal employees must fill out productivity reports or resign

    February 23, 2025

Categories

  • Economy (1,984)
  • Editor's Pick (194)
  • Investing (185)
  • Stock (1,321)
  • About us
  • Contact us
  • Privacy Policy
  • Terms & Conditions

Copyright © 2025 Portfolioperformancetoday.com All Rights Reserved.

Portfolio Performance Today
  • Investing
  • Stock
  • Economy
  • Editor’s Pick
Portfolio Performance Today
  • Investing
  • Stock
  • Economy
  • Editor’s Pick
Copyright © 2025 Portfolioperformancetoday.com All Rights Reserved.

Read alsox

PepeX poised for 250% presale surge while...

April 6, 2025

Why First Solar stock remains a raging...

June 21, 2025

Here’s why KOSPI Index rose after tariffs...

July 8, 2025