OpenAI IPO delay and market conditions (with Ed Lello)

OpenAI is considering delaying its IPO until next year, according to Bloomberg reporting. This news caused SoftBank shares to fall and is reflected in tech sector weakness.

Ed Lello

Bailey Lip Schultz

OpenAI appears willing to let Anthropic go public first, which would set the tone and valuation expectations. The key question for OpenAI is the confidence in its long-term contracts and obligations.

Moving from late Q4 to early Q1 is not a major shift, but it signals potential challenges ahead for mega-IPOs. The banks leading both deals (Goldman Sachs, Morgan Stanley) could still see a big payday, but the broader market conditions will be a factor.

Goldman Sachs and Morgan Stanley are down nearly 4% each. The banks are involved in preparing both OpenAI and Anthropic for listings.

Ed Lello

Bailey Lip Schultz

Both banks are leading the charge on both deals, which would bring a big payday. The debate is whether Anthropic goes public in late Q3 or early Q4, and what that means for the banks.

These companies need to raise a lot of money to dominate AI, so it's not just IPO fees but also future equity and bond sales that require public markets to be trading well.

OpenAI's June 8th statement indicated a benefit to staying private. Current market conditions, including this week's volatility, are a factor in their timing decision.

Ed Lello

Bailey Lip Schultz

The volatility this week doesn't matter much in the grand scheme unless there's a dire concern about market conditions in September, October, or year-end. Bankers often use market conditions as an excuse to delay IPOs.

Chip stocks are still up about 90% on the year, so most people are still feeling good, but we are hitting summertime jitters.

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