The creator of ChatGPT is preparing to file for an initial public offering, possibly as early as this week. The company, led by Sam Altman, is working with Goldman Sachs and Morgan Stanley to prepare a prospectus that it plans to confidentially submit to the U.S. Securities and Exchange Commission. The goal is to be ready for an initial public offering by September of this year at the latest. If the plans come to fruition, it will be one of the largest IPOs in history.
The trial is over, clearing the way for an IPO
As recently as Monday, OpenAI was appearing before a federal court in Oakland, California. Elon Musk, the company's co-founder and now its biggest critic, sued Altman and company president Greg Brockman, alleging that they had betrayed OpenAI's original mission as a nonprofit research institute and turned it into a commercial company. Between 2015 and 2017, Musk invested $38 million in OpenAI and argued that this gave him the right to challenge the departure from the founding agreement.
But the jury rejected his claim. According to the jury, Musk had waited too long to file the lawsuit. The judge immediately accepted the jury's decision. Musk described it on his X platform as a "calendar technicality" and announced an appeal. For OpenAI, this meant a green light. Resolving this legal issue removed the main obstacle to an IPO (initial public offering) and likely gave OpenAI the confidence to accelerate its timeline.
Why the rush? Just one day after Musk lost the court case, his other company, SpaceX, which merged with xAI this year, announced its IPO. And Goldman Sachs, which will lead SpaceX through the entire process, is also at the table with OpenAI. The simultaneous filings are forcing portfolio managers to compare the two companies side by side.
According to analysts, this works in OpenAI's favor. The shared attention dilutes detailed scrutiny, allowing each company to tell its own story. SpaceX was most recently valued at $1.25 trillion, while OpenAI is valued at around $852 billion based on its latest funding round.
OpenAI CFO Sarah Friar told CNBC just last month that for a company of this size, behaving like a public company is "good hygiene," but she did not provide a specific timeline. So far, the company has not publicly disclosed any details. An OpenAI spokesperson issued a statement: "As part of standard governance, we regularly evaluate a range of strategic options. Our focus remains on execution." Neither Goldman Sachs nor Morgan Stanley commented on the matter.
Ambition and a few dark clouds
OpenAI's valuation could reach as much as $1 trillion in an IPO, Reuters reported as early as last October. At the low end, the company is said to be seeking to raise at least $60 billion. This year, the company closed the largest funding round in Silicon Valley history, worth $122 billion, with participants including Amazon, Nvidia, and SoftBank.
ChatGPT has more than 900 million weekly active users and over 50 million paying subscribers. Impressive numbers, but questions are mounting beneath the surface.
According to the Wall Street Journal, the company has recently missed some internal targets for both revenue and user numbers. Anthropic, the creator of the Claude chatbot, is growing faster and taking customers in the enterprise segment and the market for AI tools for programmers. Anthropic is currently in talks over a new funding round at a valuation of $900 billion, which would put it ahead of OpenAI. In April, the company announced annual revenue of more than $30 billion.
Meanwhile, OpenAI is burning through cash at an unimaginable rate. Its data center commitments are enormous, and investors are waiting to see whether revenue can cover this spending appetite. Going public would bring in fresh capital, but also quarterly results, analysts, and public scrutiny of every move.
