6 things to know before you buy the stock

OpenAI, the company behind ChatGPT, has made headlines by filing a confidential S-1 with the Securities and Exchange Commission, signaling its intention to enter the stock-trading race with a potential mega-IPO. While SpaceX is set to debut soon and Anthropic is on deck, OpenAI is taking its time to decide on the timing of its public debut.

Established in 2015 as a nonprofit, OpenAI aimed to advance digital intelligence for the benefit of humanity without the constraints of financial return. However, recent valuations have put the company at around $852 billion, with expectations of a public valuation exceeding $1 trillion. This shift to a publicly traded entity may bring pressure from investors to deliver strong financial returns.

Before investing in OpenAI once it goes public, here are six things to consider:

1. Is the IPO market getting crowded?
   With OpenAI, SpaceX, and Anthropic all expected to go public in a short period, some investors may worry about oversaturation. However, historical data suggests that the market can absorb large IPOs without significant issues.

2. Can OpenAI monetize ChatGPT?
   Monetizing ChatGPT may be challenging due to subscription overload among consumers. While OpenAI has experimented with pay-per-click ads, user sensitivity and privacy concerns may impact its revenue streams.

3. The AI boom comes with a massive price tag
   OpenAI’s ambitious plans include significant investments in data centers and AI model training, with projected costs in the billions over the next decade.

4. OpenAI hasn’t made a profit so far
   Despite its growth, OpenAI has yet to turn a profit. Reports suggest that the company may not see profitability until 2029, facing stiff competition from Anthropic in the AI space.

5. You can buy the stock before the IPO
   Private-market stock held by investors and insiders is available in the secondary market, with platforms like Forge offering access. However, only accredited investors meeting specific criteria can purchase these shares.

6. OpenAI will likely be a part of index funds
   Once OpenAI goes public, it may become part of index funds, providing investors with exposure to the stock through their brokerage accounts.

   As OpenAI prepares for its IPO, investors should carefully consider the company’s financial prospects and competitive landscape before making investment decisions. Stay informed on the latest developments to make informed choices in the evolving tech industry.