OpenAI, the company behind ChatGPT, is jumping into the big IPO race for stock trading, filing a confidential S-1 with the Securities and Exchange Commission. With SpaceX slated for a Friday launch and Anthropic on deck, OpenAI is in the pipeline but has yet to set a launch date.
“We haven’t decided on a time yet; it may be time because there are things we want to do that may be easier as an independent company,” OpenAI said in a statement posted on its website. “But it’s a complex set of trade-offs, and this gives us an opportunity to go public sooner if that ends up being the best.”
It may sound like OpenAI exploded onto the tech scene overnight, but the company’s roots as a non-profit organization date back to 2015, when it introduced itself as an intelligence research company. It aimed to “develop digital intelligence in a way that could benefit humanity as a whole, without being constrained by the need to generate financial returns.”
Recently valued at $852 billion and potentially seeking a valuation of $1 trillion or more, publicly traded OpenAI may face pressure from investors to deliver strong financial returns.
Here are six things you should know before buying OpenAI when it goes public.
1. Is the IPO market getting saturated?
With OpenAI, SpaceX, and Anthropic all expected to debut in the short term, investors may be wondering if the market is becoming oversaturated with big-name math bets. Deutsche Bank’s chief global strategy officer Bankim Chadha told Yahoo Finance that the S&P 500 has absorbed large IPOs in the past without difficulty.
“It makes sense that these big IPOs would take all the money out, and then take out all the other stocks,” Chadha said. “Look at how the S & P 500 has behaved during the issuance of waves of large IPOs, as we speak now. When the market is very strong, the issuance takes over, and the market basically stays strong.”
2. Can OpenAI monetize ChatGPT?
Overloading growing consumer subscriptions can be a hindrance to monetizing ChatGPT. Currently, subscription prices range from free with limited access to $100 per month for power users. Of the estimated 800 million users, only 5% pay, according to the Financial Times.
OpenAI experimented with pay-per-click ads within ChatGPT query results. A Forrester study found that AI users are “generally sensitive to ads that blur the line between useful information and paid promotion.” Users are also aware that personal information may be accessed without their consent. However, the majority of those polled (83%) said they would be willing to put up with ads for a free service.
3. The AI boom comes with a huge price tag
Data centers may not be popular with the “not in my backyard” crowd, but perhaps more importantly, they aren’t cheap either. OpenAI said it plans to spend $115 billion by 2029, mostly on data centers, to fund its AI infrastructure.
And then you have to train the AI models, at an estimated cost of about $125 billion in 2028, and again in 2029. By 2030, those training costs will dip below $100 billion (but not by much), according to the Wall Street Journal.
4. OpenAI has not made a profit so far
Despite massive growth, OpenAI has not yet turned a profit.
Reports indicate that the company could generate revenue of approximately 30 billion dollars in 2026, while still posting a loss of approximately $14 billion that year. Total losses could reach $44 billion before OpenAI turns a profit in 2029.
Under its current “limited profit” corporate structure, OpenAI will have to transition from its opaque, nonprofit-like heritage to a fully transparent, publicly traded, for-profit company. Anthropic, and ChatGPT nemesis Claude – which has also filed for a future IPO – will be the main and formidable competitor.
5. You can buy the stock before the IPO
As with other pre-IPO offerings, private market stock previously held by investors, employees, and other insiders is available in the secondary market. For example, ARK funds hold OpenAI in exchange-traded funds, including the ARK Innovation ETF (ARKK) and the Next Generation Internet ETF (ARKW).
Shares may also be available on secondary markets such as Forge. However, you must be an accredited investor to purchase these shares, with a net worth of $1 million or more (excluding your home) and an income of at least $200,000 individually or $300,000 jointly.
6. OpenAI will probably be part of index funds
If your broker doesn’t offer an OpenAI IPO (and we don’t yet know which brokers), you can eventually gain exposure to the stock by buying it when it’s publicly traded – or through an index fund, although which index (S&P 500, Nasdaq) is also not yet known.
Read more: SpaceX: How can I buy stock?
