OpenAI in talks for $500 billion valuation via secondary sale
The move would make it the most valuable startup in history, eclipsing SpaceX and ByteDance.
OpenAI is in early discussions to allow current and former employees to sell their shares at a staggering $500 billion valuation. This figure reflects a 66.7% increase from the company’s previous valuation of $300 billion during a funding round in April and would make OpenAI the most valuable startup in history.
Currently, the most valuable private company is Elon Musk’s SpaceX, which reached a $350 billion valuation in December. OpenAI is currently ranked third, behind ByteDance (TikTok’s parent company), which is valued at $315 billion.
Sources familiar with the matter told Bloomberg that OpenAI is planning a multi-billion-dollar secondary sale, allowing employees to cash in on their stock options. Existing investors, including Thrive Capital, have already expressed interest in purchasing shares. OpenAI has not commented on the report.
The potential share sale comes amid a heated global competition for top AI talent. Meta, in particular, has stepped up efforts to rebuild its AI division, reportedly offering compensation packages worth hundreds of millions of dollars. In one case, a high-profile engineer allegedly turned down a Meta offer valued at $1.5 billion over several years. A secondary sale allows OpenAI to reward employees with substantial financial returns, without raising new capital or diluting existing shareholders.
While OpenAI’s meteoric valuation highlights its central role in the AI boom, it also raises questions. The popularity of ChatGPT is undeniable, weekly users reached 700 million this week, quadruple last year’s figure, but the company has yet to establish a sustainable business model. Infrastructure and AI training costs remain enormous, and R&D spending shows no sign of slowing.
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Currently, ChatGPT has around 5 million paid business subscribers. Even so, the company’s revenue is far from covering its expenses. OpenAI projects an annual revenue run rate of $12 billion by 2025, but remains unprofitable.
The scale of the valuation is especially striking when compared with more established tech giants. When Apple first crossed the $500 billion valuation mark in February 2012, it had robust profitability and a diverse product lineup. That quarter alone, Apple sold 35 million iPhones, generated $39.2 billion in revenue, and posted $11.6 billion in net profit, nearly the same as OpenAI’s projected annual revenue.
With no current profits and expenses outpacing revenue, OpenAI’s $500 billion valuation is highly speculative. It underscores growing concerns that the AI market may be entering bubble territory, one that could burst if companies fail to develop meaningful, scalable revenue models.
