OpenAI May Delay IPO Until Next Year

OpenAI is reportedly considering postponing its initial public offering (IPO) until next year, a shift in strategy according to three sources familiar with the discussions.

Initially, the creators of ChatGPT had engaged bankers and lawyers with hopes of going public in the third or fourth quarters of this year. CEO Sam Altman was actively encouraging advisers to help the startup achieve a valuation of $1 trillion, up from its earlier private valuation of $730 billion, as shared by the unnamed sources who were not authorized to discuss internal matters.

A number of recent factors have caused OpenAI executives to reconsider their plans. A significant concern stems from the performance of Elon Musk’s SpaceX after its IPO earlier this month. That IPO set a record, raising over $85 billion and giving it a starting valuation of $1.77 trillion. However, since then, its stock price has dropped considerably, falling from a high of $202 last week to $153 at the close on Thursday.

Additionally, global market volatility has been notable recently, particularly affecting tech stocks, as investors question whether AI companies can deliver on their ambitious goals. This turmoil has led OpenAI’s advisers to caution, in recent discussions, that there might be limited enthusiasm from retail investors for OpenAI shares.

This possible delay in OpenAI’s IPO could be disappointing for both Wall Street and Silicon Valley. The anticipated IPOs of OpenAI and its competitor, Anthropic, were expected to generate considerable wealth. Earlier this month, OpenAI indicated it had filed confidential paperwork with securities regulators to initiate the IPO process, but hasn’t committed to a specific timeline.

Moreover, OpenAI’s financial situation introduces additional complexities regarding its IPO plans. The company has incurred substantial costs related to training and operating language models at scale, all while facing fierce competition from well-funded rivals such as Anthropic and Google.