Report: OpenAI Considering Selling Shares at $86B Valuation

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Facts

  • Artificial intelligence (AI) startup OpenAI is reportedly discussing selling existing employees' shares at a valuation of $86B in a transaction known as a tender offer.1
  • The firm is reportedly negotiating with potential investors, which means it hasn't finalized allocations and the parameters of the deal could still evolve.1
  • Last month, the ChatGPT creator, which is backed by Microsoft, was reportedly seeking a valuation of as much as $90B.2
  • An $86B valuation would make OpenAI, which is led by CEO Sam Altman and president Greg Brockman, one of the world’s most valuable companies behind just Elon Musk’s SpaceX as well as ByteDance, the parent company of the social media app TikTok.3
  • San Francisco-based OpenAI is best known for developing ChatGPT, a popular chatbot that can respond to user prompts.4

Sources: 1Bloomberg, 2Reuters, 3Fortune and 4Firstpost.

Narratives

  • Narrative A, as provided by Ft. Employees at OpenAI have done a great job getting ahead of the AI industry curve and creating a chatbot with hundreds of thousands of users. They deserve to cash in on the company’s success. This offering will also allow OpenAI to attract more talent and compete with bigger tech firms and it's a win-win.
  • Narrative B, as provided by New York Post. Employees at OpenAI shouldn't start spending their windfall just yet. This valuation possibly relies on funding from Middle East-based investors who may not be in a position to contribute in light of the conflict in the region. There are major question marks and OpenAI is still a ways away from its big payday.

Predictions