Unspecified sources told The New York Times that OpenAI is increasingly considering postponing its initial public offering (IPO) from late 2024 to next year. The report arrives as AI markets and technology shares show rising instability.
What led to this?
OpenAI had engaged investment bankers and lawyers to prepare for an IPO that could have taken place as early as the third or fourth quarter of 2024. However, volatility in the stock market and weak performances among tech companies — including the sharp drop in shares after Elon Musk's SpaceX debut — have weakened the case for an immediate public offering.
The $1 trillion target and advisors' warning
According to reports, Chief Executive Officer Sam Altman has pushed for a $1 trillion valuation at IPO. Forbes.com reported the company’s most recent valuation at $852 billion. The company reported roughly $13 billion in revenue last year alongside a $21 billion net loss, and it has projected about $600 billion in expected spending on compute capacity and hardware through 2030.
Advisors to OpenAI reportedly warned that current tech-market volatility might mean insufficient investor enthusiasm for a $1 trillion debut. They presented two choices: wait — possibly until 2027 — for a $1 trillion IPO, or list sooner at a lower valuation.
Altman is said to have called all sub-$1 trillion options a “nonstarter,” effectively rejecting them as unacceptable.
Financial implications and company responses
Against growing doubts about the AI sector’s profitability, OpenAI is looking for new revenue streams, such as testing advertisements in ChatGPT and pursuing e-commerce partnerships. The company has also scaled back loss-making projects, including the Sora video app.
Legal backdrop and the SpaceX connection
SpaceX’s troubled public debut and broader weakness in tech stocks have added to market uncertainty. Separately, long-running disputes involving OpenAI and Elon Musk have continued in the courts: a federal jury in California on May 18 ruled against Musk, finding he filed suit too late regarding claims that Sam Altman and OpenAI had reneged on an alleged promise to operate as a nonprofit. Elon Musk has indicated he will appeal; Judge Yvonne Gonzalez Rogers said she was prepared to dismiss any appeal.
The May 18 decision removes a legal obstacle that could have affected OpenAI’s corporate transformation.
Practical choices ahead
OpenAI faces a clear trade-off: delay the IPO and wait for the $1 trillion valuation, or proceed sooner with a lower valuation. The company’s final course will depend on market sentiment and whether investors will support a high-value public offering in the coming months and years.
