OpenAI IPO Delay: Learn from SpaceX's Volatility

💡 Key Takeaway

IPOs of large AI companies are historically volatile, so investors should wait about a year after the IPO before buying.

What Happened: OpenAI Delays IPO to Avoid SpaceX's Volatility

OpenAI, the company behind ChatGPT, is reportedly considering delaying its IPO until 2027, aiming for a $1 trillion valuation. Advisors to CEO Sam Altman are citing the post-IPO volatility of SpaceX as a reason to wait.

SpaceX went public at $150 per share, spiked to $225, and has since fallen back to around $156. Cerebras, another AI IPO, experienced a similar spike-and-volatility pattern.

Both companies are burning through cash on AI infrastructure. SpaceX reported a $5 billion net loss last year with $20.7 billion in capital expenditures. OpenAI's losses are estimated at $21 billion on $13 billion revenue.

Investors are growing skeptical about when these AI companies will turn profitable, given their massive spending on data centers and computing power.

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What This Means for Me

If you hold SPCX or CBRS, expect continued volatility; consider trimming positions if you need stability. Investors with exposure to Alphabet (GOOGL) should watch for increased AI spending impacting margins, though their cloud business may benefit. For those waiting for OpenAI's IPO, the best strategy is patience—wait at least a year after listing before buying.

Why It Matters: IPO Volatility Is the Norm, Not the Exception

Research shows that IPOs of companies worth over $10 billion average a 26.5% first-week return but only 3.5% after one year. This suggests that even without a delay, OpenAI's stock would likely be volatile and potentially underperform.

The delay itself signals that OpenAI is sensitive to market sentiment, which could be a red flag for investors looking for stable growth.

For investors in SpaceX and Cerebras, the pattern is already playing out. The article suggests waiting about a year after any AI mega-IPO before buying to avoid the initial volatility.

If AI spending continues without clear profitability, the entire sector could face headwinds, affecting not just pure-play AI companies but also infrastructure providers like Alphabet.

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Stock to Watch

StocksImpactAnalysis
SPCX
Negative
Post-IPO volatility and heavy losses from AI spending; stock has fallen from $225 IPO high to ~$156.
CBRS
Negative
Recent AI IPO with similar spike-and-volatility pattern, reflecting investor skepticism.
GOOG
Neutral
Mentioned as customer of SpaceX's AI infrastructure but not directly impacted by this news.
GOOGL
Neutral
Same as GOOG; Alphabet benefits from AI demand but faces its own spending pressures.
GOOGN
Neutral
Same as other Alphabet tickers; no direct impact from OpenAI delay news.

Source: The Motley Fool
Analysis generated by Bobby AI quantitative model, reviewed and edited by our research team. This is not financial advice. Always do your own research before making investment decisions.

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Bobby Insight

bobby-insight

Avoid buying AI IPO stocks for at least a year post-listing due to historical volatility and spending concerns.

IPOs of large companies are statistically volatile in the first year, and AI companies are burning cash with no near-term profits. Waiting allows the hype to settle and fundamentals to emerge.

What This Means for Me

means-for-me
If you hold SPCX or CBRS, expect continued volatility; consider trimming positions if you need stability. Investors with exposure to Alphabet (GOOGL) should watch for increased AI spending impacting margins, though their cloud business may benefit. For those waiting for OpenAI's IPO, the best strategy is patience—wait at least a year after listing before buying.

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