OpenAI is worth $800B because that’s what the last funding round valued it at. It does not mean that >50% of existing shareholders will agree to sell for that amount. If a serious buyer does emerge they will likely hold out for 2x that, maybe more.
OpenAI is worth $800B because that’s what the last funding round valued it at. It does not mean that >50% of existing shareholders will agree to sell for that amount. If a serious buyer does emerge they will likely hold out for 2x that, maybe more.
OpenAI is worth the discounted value of their future free cash flow. It's not clear at this point how much free cash flow they will ever generate, if any.
Might be negative.
OpenAI will have pretty good future free cash flow...until GDDR7 prices are no longer inflated by scarcity. Which could be 24-72 months.
OpenAI is worth whatever someone will pay for them. Overpriced and underpriced are just words. If someone's willing to pay an amount for something, that's what it's worth.
"We're selling to willing buyers at the current fair market price."
Well, yes but not really.
I could buy a local sweetshop for a 100 billion dollars, just because I might do that, that doesn't mean it's actually worth that.
On the contrary, you would be demonstrating that, to at least one buyer, it was worth that. By definition.
I think the argument you’re really looking to contradict is this: if 1% of a company is worth $1B to somebody, then somebody would pay $100B for the whole company. That does not follow (and indeed the acquisition price of a company is almost never exactly its “market valuation”).
> and indeed the acquisition price of a company is almost never exactly its “market valuation”
The acquisition price is almost always significantly more than its market value. The reason is that if you start buying shares on the open market each transaction of yours will raise the stock price, and eventually you will price yourself out of the purchase.
So what buyers do is negotiate directly with the board and propose an inflated price that >50% of shareholders are okay with.
In some sense I would argue that it is the next highest bid that determine the worth. I.e. what the buyer could hope to resell for.
No.
You are assuming that the money that I buy the sweet shop for is what I evaluate the value of the sweet shop to be worth. That's not necessarily true.
You're also assuming I'm not insane.
If I offer to buy an apple from you for 1 trillion dollars because I believe consuming that specific apple will make me a god, that apple is not actually worth 1 trillion dollars.
Items don’t have an inherent “worth”.
If I have an apple and you agree to buy it for $1T, then the apple is indeed worth $1T at that moment.
After the purchase is complete it is worth ~$0, or whatever the next person is willing to pay you for it.
Alternatively you can say “it is still worth $1T to me” and that would be true as well.
When we are specifically talking about companies, their value is where buyers meet sellers in the order book.
What if I say, "it's not worth $1T to me but I'm doing it for the memes"
Are you selling me just the apple?
Doesn't change anything. If you buy something for a certain price, regardless of whatever reasons you have for doing so (including but not limited to, being rich and irresponsible, being insane, or doing it for the memes.) Then that thing has that value to you at that point in time.
Whether someone else will share your judgment of its worth is highly unlikely, but it is also entirely irrelevant. Worth has never meant "objective value to literally everyone."
If I deliberately ridiculously over pay for an item to create publicity then as the buyer it explicitly doesn't have that value to me. The value isn't in the item purchased.
I think your definition of value / worth should be based on the seller, not the buyer.
Real world example: someone just bought the first Ferrari Luce EV for $40M. Obv $600K starting price for that model was low!
https://www.reuters.com/business/autos-transportation/ferrar...
Yes it's literally what it means. It was worth that to you (even if just to prove a point).
What else does worth mean?
Okay.
I buy a sweetshop for 1 billion dollars.
Now, immediately after I have bought it, what's it worth?
> Now, immediately after I have bought it, what's it worth?
Is a buyer asking to buy it? If yes, whatever you sell it for.
If no, then you really have no idea what it's worth now, all you know is it was worth 1B to you when you bought it.
What the next person would buy it for. Maybe you buy it for the memes but it doesn't mean another would afterwards.
So if I bought it for the memes, the shop itself wasn't worth $1 billion.
I could have bought bike shop, or an apple.
That value wasn't associated with that specific item. It's an arbitrary choice.
It was actually, because value is defined as such. Why do you think buying something for the memes is worth less? Like what mechanism exactly makes it worth less? Seems like that's the fundamental misunderstanding you're having in your comments with others in this thread.
I guess it depends on your definition.
The issue is that buying something for the memes isnt worth less, it's 'what you are actually buying'?.
If I arbitarily decide to buy an apple for $10 that I could have bought for $1, what did I actually buy with the $9.
Publicity? Goodwill?
I don't believe I only bought an apple, even from the person I bought it from.
You bought $1 of apple and $9 of memes. That you spent 9 dollars of that for such a purpose is none of my concern.
Which is exactly why people should be defining things in terms of the seller, not the buyer.
and just what the fuck is ""worth"" anyway
Do you mean that there is no way to value OpenAI for a purchase so a sale is impossible?
At the least OpenAI is worth what the market is willing to pay for it.
Not to mention that the US would have to approve the sale to another country, which they are unlikely to do.
Possibly, they could also sell assets and cease operation.
Selling the assets would probably be liable to similar restrictions.
Or 2x less. 800B valued is not 800B invested. And it wouldn't be the first time investors sell at a loss if sentiment declines.