Blue Owl shares surge after private credit firm cites SpaceX gains

Blue Owl Capital, a private credit firm that has been in the spotlight recently due to concerns over exposure to software companies, saw its shares surge by 10% in Thursday’s trading session. The spike in share price came after executives revealed significant gains from their investment in SpaceX.

During the firm’s first-quarter earnings call, an executive disclosed that they had made approximately 10 times their initial investment in SpaceX. Blue Owl has already sold off half of its stake in the company at a valuation of $1.25 trillion, but continues to hold the remaining shares.

The call, led by Marc Lipschultz, co-chief executive officer, and Alan Kirshenbaum, chief financial officer, did not specify which executive was discussing the SpaceX investment. The gains from SpaceX could potentially offset any losses that Blue Owl may incur from defaults in their software company investments.

While private credit funds typically focus on loans, they also have the flexibility to invest in preferred and common shares of companies. In the case of SpaceX, Blue Owl initially provided a loan to the company, which later led to an equity investment opportunity.

Despite concerns about the software sector experiencing a downturn, Blue Owl management remains optimistic about their portfolio’s performance. They noted that while loan-to-value rates have deteriorated, there is still a significant cushion before any potential losses materialize.

As this story continues to develop, stay tuned for further updates on Blue Owl’s investment strategies and portfolio performance.

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