OpenAI is planning to IPO: Investors could be waiting a while
Key takeaways
- OpenAI is planning to go public, and submitted early paperwork with the Securities and Exchange Commission in June.
- But an actual IPO could be a long way off, as the company behind ChatGPT cautions "we have not decided on timing yet."
- What's next: Australian investors will be able to buy OpenAI shares via a broker with NASDAQ access if and when the company goes public.
Hey ChatGPT, when is OpenAI going public?
"You've really nailed the key question—and you're absolutely right. OpenAI is planning to go public. Sort of. Maybe. Is there anything else I can help you with?"
OpenAI, the US firm behind ChatGPT, is getting ready to go public. Analysts suggest it could be looking at a trillion dollar valuation.
If OpenAI does go public, Australian investors will have a few options to get in on the action. But there are a lot of reasons why the IPO might take many months, if it ever happens at all.
3 ways to buy OpenAI shares when the company does go public
1. Register for the Australian offer
It's usually hard for retail Australian investors to buy shares when a big US company goes public. But if and when OpenAI does go public, there will likely be an Australian offer handled by a designated local agent.
CommSec and Sharesies took part in SpaceX's Australian allocation, and required interested investors to register in advance.
Keep an eye out for more information if OpenAI gets closer to its IPO date. And remember you'll need to register before the IPO, and approval can take a few days if you don't already have an account with the broker behind the offer.
2. Buy shares on the open market
Most Australian investors will have to wait until the shares hit the open market. Then you'll be able to invest via any local trading platform or broker with access to US markets (OpenAI will almost certainly list on the NASDAQ).
You'll miss out on the IPO price, but there's no guarantee shares will jump immediately after launch. They did for SpaceX, but there are plenty of examples of big tech stocks plunging after a high-profile IPO.
Meta's share price actually dropped in the days after it launched in 2012. In hindsight, a very small discount on a very high-growth stock.
3. Invest via an ETF
We don't know what ETFs will include OpenAI in the event it goes public. A NASDAQ, tech or AI-themed ETF is your best bet.
And unlike buying shares directly, there will be ASX-traded ETFs you can access instead if you want to keep things local.
Why is OpenAI unclear about its IPO timeline?
OpenAI submitted a confidential S-1 filing in early June. This is a form of paperwork you can submit before going public in the US. But unlike a public S-1, a confidential filing is not paperwork the public can see.
It's a way companies can test the waters with the SEC before committing to a full IPO process. Anthropic is doing the exact same thing. OpenAI could walk away and decide to stay private.
The company's statement about its IPO plans is not massively encouraging.
"We have not decided on timing yet; it may be a while because there are things we want to do that are likely easier as a private company. But it's a complicated set of tradeoffs and this gives us the option to go public sooner if that ends up being best."
OpenAI is a complicated business. It is burning cash (all AI companies are), it has a complicated ownership structure and partnerships with giants like Microsoft that it is slowly re-structuring.
Until late last year it was technically a non-profit, with a "capped profit" subsidiary. Now it's a Public Benefit Corporation, with the non-profit OpenAI Foundation owning a 26% stake.
OpenAI's cash burn is enormous. Plenty of investors are willing to buy into a future success story that's spending big right now, but OpenAI is burning tens of billions of dollars more than it makes in revenue.
Profitability is years away, if it ever gets there.
It's a hard sell for investors, especially at a time when there are so many other high-profile IPOs in the works. There's only so much money to go round.
But then you could say the same thing about SpaceX, and its shares are up 15% from launch already.
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