OpenAI postpones planned IPO – concerns over weak demand

The target for CEO Sam Altman is a valuation of one trillion US dollars. In the most recent funding round, OpenAI was valued at 730 billion US dollars. However, backing away from this figure is out of the question for Altman, one of the insiders told the newspaper. They had presented the leadership with the choice of waiting with the IPO until 2027 in order to reach the one-trillion-dollar valuation demanded by OpenAI chief Sam Altman, or lowering the target figure for a faster debut.

In view of the recent market turbulence and the share price losses of technology stocks, advisers had warned of low demand from retail investors over the past week. Internally, according to the report, there have now been warnings that shares in OpenAI could encounter too little interest from retail investors. Investors were increasingly questioning whether companies in the field of artificial intelligence (AI) could deliver on their big promises, it added.

Market sentiment and risks

Market sentiment has noticeably deteriorated over the past weeks. Uncertainties about the further development of the AI sector, which have recently pushed the Nasdaq noticeably into negative territory, are also weighing on the scope for large new issues. Important details of the IPO, however, have remained under wraps – in particular regarding size, timing, and the targeted price range.

SpaceX as a cautionary example

The development at SpaceX is also seen as a deterrent example: the space company of Tesla CEO Elon Musk had recently completed the largest market debut in history, the New York Times reported. In the two weeks since trading began, shares initially rose rapidly from 161 US dollars to 225 US dollars and have since fallen to 153 US dollars. After a high of 202 dollars, the stock slid to 153 dollars by Thursday. There have been phases in which SpaceX's market value temporarily surpassed that of TSMC, Amazon, and Microsoft, but they are now ahead again.

The postponement at OpenAI, according to the New York Times, "highlights the uncertain future of the rapidly rising AI giants." Although OpenAI had submitted the necessary documents for an IPO at the beginning of the month, it was already unclear at the time whether the timeline could actually be met. With the delay, the question is gaining weight as to whether investors will support the extremely high valuations of AI companies in the long term that were recently paid in private funding rounds.

What is now at stake

For Altman and management, it is now a matter of finding a balance: an IPO with a significantly reduced valuation would undermine internal demands and damage the confidence of existing investors. Waiting for better market conditions, on the other hand, costs time and money, as the company continues to need capital to finance its models, data centers, and products. The upcoming quarterly reports of the industry are therefore likely to be followed with particular attention.

If the postponement materializes, it would send a signal to the entire tech industry that even the greatest hopes of the AI wave cannot make the leap onto the stock market unconditionally. Whether OpenAI ultimately goes public in 2027 with the targeted trillion-dollar valuation or seeks a compromise remains open for now.