‘We expect it to leak’: OpenAI is frontrunning the narrative around its $1 trillion IPO

OpenAI confidentially filed IPO papers with the SEC yesterday, setting the stage for yet another massive tech company float later in the year. You can read OpenAI’s statement here. It’s very short. Here is the entire thing, verbatim: The most interesting aspect of that statement are the words “we expect it to leak,” which suggest the company was rushed into making the statement—or at least didn’t want to be rushed into making it and thus got its retaliation in first, so to speak. The valuation is expected to be greater than $1 trillion, per the FT. It was most recently valued at $852 billion. That would make it the third $1 trillion-plus IPO expected this year, following SpaceX ($1.78 trillion) and Anthropic (last valued at $965 billion). The Wall Street Journal has a great story about the vast firehose of money pouring into AI right now. $159 billion in bond funding this year alone, for instance, including some really offbeat vehicles such as Google’s 100-year bond, at a yield of 6.05%, denominated in British pounds sterling. OpenAI, Anthropic, and SpaceX are all asking investors a similar question: Are you willing to buy stock in our massively valued, unprofitable, speculative business models, which rely on a ton of assumptions about the future that have yet to be borne out? Some on Wall Street are saying no. Fortune received an email this morning from one CEO at an asset investor with $1 billion-plus under management who says he wouldn’t touch ‘em for six months. (Presumably that’s to watch for the effect of the end of the executive lockup periods, after which insiders will be allowed to sell their stock.) "Markets face the test of yet another superheavyweight firm listing to test demand for these highly-valued companies that promise to reshape not just the investing landscape, but the entirety of human society,” IG’s Chris Beauchamp said in an email. “The parallels with the early 2010s when the previous wave of loss-making tech [companies went public] are clear, but this time the stakes are much higher and the risks much greater." Clients are asking whether “the upcoming wall of issuance from mega cap IPOs” will be too much for investors to absorb, thus dragging down the market, according to Inigo Fraser Jenkins of AllianceBernstein. SpaceX’s valuation is $1.77 trillion, after all. OpenAI will be another $1 trillion-plus. “Is this, we are asked, one of those events one will look back on and ask why it wasn’t an obvious sell signal at the time?” he said in a note to clients seen by Fortune. That’s not what traders should worry about, he argues. Only a fraction of SpaceX’s stock is being offered to the public, about $75 billion worth. That’s less than the rate at which corporate America buys back its own stock, removing it from the market to boost the price. Instead, investors should worry about the business models of Anthropic and OpenAI, he wrote: “The other worry is … the increased circularity of the whole thing. Roughly one-third of tech sector earnings derive from cross-holdings in companies such as the ones hoping to IPO, such as Alphabet’s holding in Anthropic. Neither of these aspects should be things that investors can countenance with equanimity.” After throwing a tantrum on Friday and early Monday morning, global stock markets largely rose in Asia and Europe today after the S&P 500 closed up yesterday. Traders seem to be pinning their hopes on President Trump’s insistence that a peace deal with Iran is imminent, and Iran’s promise to stop attacking Israel. Oil prices sank on the news. Israel, however, is continuing to strike positions in Lebanon it believes are occupied by Hezbollah, the Iranian proxy terror group. Seven out of 10 red flags that signal impending bear markets have now been triggered, according to Bank of America’s Savita Subramanian. That’s the average number that were triggered prior to previous bear markets. Those red flags include things like surveys showing overconfidence in stocks and technical measures of tightening credit conditions. “Our S&P 500 year-end target of 7100 suggests 6% downside from here,” she told clients. The price of Brent crude oil fell sharply over the last 24 hours and was sitting at $92 per barrel this morning, after President Trump insisted (again) that a peace deal with Iran was imminent that would open the Strait of Hormuz “immediately upon signing” in two or three days. Here’s what he’s saying on social media: The conflict with Iran caused the price of oil to rise but it has not produced a physical scarcity of oil, at least in Europe and the U.S. That may be about to change, according to two sets of Wall Street analysts. Until recently, the world was relatively well-cushioned against a negative oil supply shock because global inventories were well supplied. The U.S. has continued to export oil. And releases from various strategic petroleum reserves (SPRs) mostly matched the losses from the Gulf, Lisa Shalett and her team at Morgan Stanl

‘We expect it to leak’: OpenAI is frontrunning the narrative around its $1 trillion IPO

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