There’s a strong chance the IPO window has passed. I just don’t see investors willing to jump in here given all the questions about the financial viability of AI.
The bulk of those investing now are broadly just pumping cash into the fire to keep their prior investments from going to zero.
We have hit a mass deceleration of what the current tech can do with transformers. The tech is also on a path to hyper-commoditization which will destroy the value of the big players as there zero moat to be had here. Absent a new major breakthrough it looks like we’re well on our way into the “trough of disillusionment” for the current AI hype cycle.
Will be interesting to see how all this plays out, but get your popcorn ready.
> There’s a strong chance the IPO window has passed
Ha, i'll take the other side of that bet. I'm not sure why you think they couldn't possibly IPO and you don't really specify why in your post.
Having been in the capital markets for 20 years, now is one of the better times to IPO and I'd bet that both OpenAI and Anthropic will IPO within 12 months.
There are lots of games you can play like releasing a small 10% float) if you are worried about not enough buyers.
There's a lot of reasons you don't want to IPO in the near- to mid-term, many based on energy suddenly being a lot more expensive than everybody thought and others based on money being a lot more expensive than everybody thought (and lenders being more risk-avers). All three of these things kind of go together.
I was in the capital markets during the COVID era, focusing on transactions for tech companies. I will take the bet that if OAI tries to IPO it will be WeWork 2.0 x100. Get ready for an even more creative version of “Community adjusted EBITDA”
On the real though, I am not sure how a 20yr veteran can say this is the best time for an IPO. Not only is a 10% float still absolutely massive, but the world is extremely unstable with the war in Iran and the US is in a recession when you factor out inflated growth driven by AI. Not to mention the Yen carry trade unwinding - there is so much loaded in the economy ready to blow up… I think the facade will collapse if OAI actually goes for it.
Umm the yen carry trade unwound in August of 2024. It hasn’t been a factor in the markets for over a year:)
> On the real though, I am not sure how a 20yr veteran can say this is the best time for an IPO.
The best time for an open AI and anthropic ipo. They are hot now, the macro environment doesn’t weigh into that calculus.
Also a 10% float isn’t massive, most companies ipo with anywhere from 20-40% of their total share count.
And being a 20 year veteran means you can cut through all the noise you mention and focuse in what matters. At all most all points in History there is doom and gloom, 20 years gives you the experience to know most of the doom and gloom never matters.
You go public when you get the chance.
I appreciate you comment and I hope I helped update your understanding of how things work!!
Current valuation of OAI is $840bn. 10% float is $80bn, largest US IPO was BABA at $24bn, how is this not massive?
Oh, sorry I thought you meant the percentage would be huge.
Yes it’s a big ipo but early indications are that they’d be about 2x over subscribed if they ipo’d today from what the sell side is saying and I don’t doubt it from what other funds are saying.
Ah understood. It will be fascinating to see how this plays out… OAI needs money one way or another. Thanks for the discourse
Most fund managers have an IQ of 50. And they get paid by fees. They will put your pension money into OpenAI without a doubt, as it’s easier to participate, crash and shrug that stay out.
“Nobody got fired for hiring McKinsey” in the PE bros era.
Polymarket (for whatever it's worth) currently has OpenAI IPO at only 4% by end June and 40% by end December (and that's even for a small-float IPO as has become common).
https://polymarket.com/event/openai-ipo-by
What is this supposed to imply? You can't reasonably draw any conclusion from betting without understanding who is betting and why.
Well, I suppose you can draw the conclusion that "polymarket customers are interested in this topic"
The Venn diagram of people who have deep understanding of capital markets and people who like betting on stuff will have non-negligible overlap. Read some of the stories about Wall Street, especially from before it was all algorithms. Moreover, evidence of apparent insider trading on Polymarket, specifically for OpenAI, has already been shared on HN. Sounds pretty crazy to me to suggest that those odds can't tell us anything about the true probabilities. What's your reasoning?
"polymarket customers think they have some alpha over other consumers on this topic"
Or even less charitable,
"People susceptible to gambling have been manipulated into spending money on this"
> What is this supposed to imply?
Wisdom of the crowd, same as guessing jellybeans in a jar. The exact average is wrong, but it's still pretty damn close because the guesses are likely to follow a normal distribution.
If the hump of the normal distribution of these guesses is around 4% (or whatever) odds on, the actual answer is unlikely to be far from that.
> You can't reasonably draw any conclusion from betting without understanding who is betting and why.
Irrelevant; Polymarket is the reflection of the bettors view. When they place their bets, they don't care which way this goes, they only care to predict the direction correctly.
Unfortunately, it could be a case of the tail wagging the dog - even if the IPO would have been successful without polymarket existing, now that they have a signal from polymarket it is likely to be used as one of the weightings when they determine the correct time to IPO.
> Wisdom of the crowd
I checked Polymarket towards the end of February for the odds of US bombing Iran and they were vanishingly low. IIRC most bets were aiming for summer 2026. YMMV.
Wisdom of the crowd has some fatal flaws that are especially important when it comes to things like IPOs.
- Most significantly, most scientific research focuses on things that are actually amenable to guesses with a normal distribution, like "amount of jellybeans in a jar" or "length of the border between country A and country B". An IPO is a binary choice where it either goes public or not. There is no correct value to converge to.
- It has been shown that as bettors gain more information about the bets of others, predictions lose accuracy and bettors converge to a consensus value instead. It seems to me that online prediction markets would be extremely prone to this as the bets of other people are all there in the market price.
- Prediction markets generally become more accurate as the diversity of the bettor pool grows. The users of polymarket and Kalshi heavily skew towards young men from certain socioeconomic groups, who may be biased towards one or the other outcome.
In the case of an OpenAI IPO, it seems likely multiple of these would converge as people start to fall prey to groupthink because "everybody knows that they'll IPO soon" in their local media bubble.
The question isn't "will they IPO" the question is "when will they IPO" which is not a binary question. The rest of your point about Polymarket users now being mostly degenerate gamblers is true though.
The relative timing, valuations (and float sizes) of the expected SpaceX, Anthropic and then OpenAI IPOs would still be highly correlated. Even allowing for moral degeneracy among most of the gamblers on this particular Polymarket market.
It’s two binary questions about whether they will IPO by specific dates. It’s not obvious to me that this maps to a more granular “when will they IPO?” question.
> It has been shown that as bettors gain more information about the bets of others, predictions lose accuracy and bettors converge to a consensus value instead.
This makes intuitive sense to me; is there a name for this phenomenon?
A prediction platform’s biggest value is publicising information from possible insiders, who at some point will work harder to maintain secrecy not to lose their informational advantage. So all that remains are people gambling on public info.
That said, greed from insiders looking to make a quick buck will always skew the price towards ‘truth’
> An IPO is a binary choice where it either goes public or not. There is no correct value to converge to.
Of course there is - they are betting on the "when".
> It has been shown that as bettors gain more information about the bets of others, predictions lose accuracy and bettors converge to a consensus value instead.
I dunno how to reply to this - that is exactly my point, but it appears (to me, anyway) that you are saying this in disagreement?
Let me clarify - my point is that wisdom of the crowd converges on to a value that is quite near the actual value.
> In the case of an OpenAI IPO, it seems likely multiple of these would converge as people start to fall prey to groupthink because "everybody knows that they'll IPO soon" in their local media bubble.
Sure, if everyone is in the same local media bubble, that once again, that is unlikely, because these are people who don't make money from the result, they make money from correctly predicting it, hence they are exactly the demographic that will seek out more and more information outside of any bubble they may be in.
It's one thing when proponents of $FOO spend time boosting their PoV/wishes/hopes on a forum. It's quite another when they have to put their money where their mouth is: then they are open to new information!
They’re not betting on when, they’re betting on if with a time limit.
if you can identify where and how prediction markets are wrong, why aren't you applying that and making millions?
> - Prediction markets generally become more accurate as the diversity of the bettor pool grows. The users of polymarket and Kalshi heavily skew towards young men from certain socioeconomic groups, who may be biased towards one or the other outcome.
Citation? If your small population is high IQ, accurate predictors and you diversify to average IQ population, won't the accuracy go down not up?
> why aren't you applying that and making millions?
Knowing that something is a lousy predictor doesn't mean that you have a better one.
A lot of predictions are binary. If you know the market is wrong, then you take the other side of the prediction.
It’s legalised insider trading. So you can always assume at this point that someone who knows will be cashing out.
That Polymarket traders believe an OpenAI IPO this quarter, or even this year, is unlikely (or else almost all of them are hedging, e.g. long on other AI stocks. Which seems unlikely.)
Anyone who thinks that position is wrong and it's >4% likely has a clear profit opportunity.
Not everyone is a degenerate gambler
How many degenerate gamblers do you need before it stops being a useful tool?
It only has $1m volume, so even that conclusion is a bit of a stretch. By comparison NCAA tournament has $15m, and US confirms aliens this year has $18m.
100% agreed. There's so much locked up appetite for IPOs, both from the tech crowd and the general public. There have been very few quality IPOs since COVID frankly.
I'll wager that the IPO market can actually absorb all three of these that yes, are the size of the last 10 years combined. The trading market itself is larger, as are values, and valuations.
I assume that to maximize value you see a standard lock and roll play here. The S-1 will declare the 10% release, with commentary about future (6 or 12 months) another 5%. Plus don't forget institutional. There's ample space here, even before the Nasdaq 100 changes that are probably coming into play. If those come into play then inflows accelerated, as did valuations.
THere's interest to hold it for diversification reasons but the reality is investors are not stupid. Look at the basket-case recent IPOs: Figma and Klarna.
Many are skeptical of LLMs and how large of an impact they will have in the long-term. Nvidia's stock performance YTD is an example of that, despite the good news being pushed forward.
People want to start seeing customers of OAI, Nvidia et al start generating incremental accounting profits from LLM-specific projects, let alone economic profits.
yeah, just fud bc fud. I've seen this movie before
Agreed. This year around is the best time for OpenAI related firm to IPO. The stock market has been resilient reaching and hovering around ATH. Along with them, SpaceX plans to IPO and will force index fund to purchase their shares at trillion dollar evaluation.
OpenAI and SpaceX firms need exit liquidity - and markets are ready!
My advise for retails folks is to stay invested in the market since these trillion dollar companies cannot afford market to tank at all.
The Private Equity world already has a solution for this:
Nasdaq's Shame
https://news.ycombinator.com/item?id=47392550
The revenue is in the ads. If they hit a decent run rate prior to the IPO then there's a viable path to profitablity and justification for the insane capex.
What AI IPOs?
Coreweave, Nebius, most Chinese AI IPOs have done extremely well.
There was one that went up and then back down. Coreweave.
Damn the narrative was just at "we are entering RSI" and this week all of a sudden it changed to "Transformers hit a wall AI winter is coming."
Very suspicious.
Unless the play is the fleece retail investors
True, although even here there likely aren’t enough retail suckers to go around given the amount of initial investment folks need to cash in. Thats the challenge when you have so much crazy pre-IPO cash pumped in.
After you float you still need to sell all those shares at the valuations you want to exit. If they floated say 10% of shares to go public and the price tanks everyone else trying to exit loses their shirt so it’s not a magic exit for the early investors.
The size of these companies make be doubtful of retail being able to fund them. There being enough retail investors with enough liquid funds who are willing to jump on this.
Lot of retail is in various funds. So those doing active management to scale of this is questionable. And then you most likely also have downward pressure for those that try to bet against these IPOs...
There's always the Softbanks of the world.
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Boomers are the perfect suckers at this point
My boomer mom is the kind of person who just heard about AI and would get IPO fomo
Older people are always a good target for any scams. With age their mental acuity drops and they also have diminishing importance in society as sad as that sounds. They are not just easier but also safer targets for the scammers. Authorities don't bend over backwards to help when the victims are old people with no leverage left.
That would have worked better a month ago. The money is drying up. And the Gulf money is gone for the next 3 quarters in the best case.
Judging by what has happened last night with Qatar's LNG installations I'd say at leat the next 3 years. Unless the war were to stop right at this moment, but slim chances for that.
there arent enough retail investors in the world to buy this ipo
but they will get a lot of flow from sovereign wealth fund and pensions
you might wonder why anthropic spend time in australia, a country with less economy than canada and almost no industry at all? likely because it has very big pension fund pool to buy their ipo
Retail investors do just fine fleecing themselves on their own
The term fleecing means „there’s nothing left here, jump ship”. Do you really believe they’re going public to cash out this early in the game?
You must be living on a different planet than me. Enterprises are just now seeing that these technologies can actually have an impact, and the companies do not have a discretionary cost cap the same way consumers/hobbyists do, so they will pay based on value.
I would expect a lot of smart money to flow out of the Nasdaq-100 trackers in anticipation of this grift.
nasdaq listings can be rough, not sure if anyone remember fb ipo
but how else will they own spacex, openai, anthropic, nvidia, in such concentration
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Hey uh. Slurs aren't cool.
You could've just as easily said "investors are morons" and had the same connotations without disparaging a group of people
> You could've just as easily said "investors are morons"
A distinction without a difference. They mean the same thing.
When "moron" started getting used as a slur, "retarded" was introduced. When "retarded" got used as a slur, "mentally challenged" was introduced.
Now that "mentally challenged" is being used as a slur, there'll soon be a replacement along .
Apparently morons once meant the same thing
ARCHAIC•MEDICINE a person having low intelligence or an intellectual disability.
I disagree, and I also don't care. I really despise this sort language policing, it is clear what my message was.
The only group of people I disparaged are Tesla investors, deservingly so.
Other types of mentally impaired people have my full sympathy, and that includes charity.
The thing about using slurs is when you respond with "but [group] deserved it!" you've implied that you're happy to use it against someone if you subjectively believe they're "deserving" and that the term should be received negatively
Incidentally, I don't refer to other types of mentally impaired people as "retard". The word has a negative connotation, similarly to "moron".
Both terms obviously should be received negatively, they are insults. That's how insults work.
I am happy to refer to more groups, not only Tesla investors, as retards too. I'll leave this as an exercise to imagination.
I'm very sorry for the person you choose to be, then
Because I understand that insults are insults, and use them accordingly?
Maybe you are running out of things to feel sorry about.
Either way, this conversation has run its course. Have a wonderful rest of your day.