This is an interesting shift compared to the past where OpenAI would’ve been public a long time ago (due to various regulations) so we would have much more direct insight.
Right now we have a ~$1 trillion company which a ton of the “economy” and valuations are based on, with near zero information on how it’s doing.
It’s because this IPO is backed by those who grew up through the boom and bust of the dotcom era, so they know now to do all their growth in secret behind the scenes and then dump onto the market when there’s nothing more in that tank. Rather than letting the public have any major growth out of their baby, and only letting the price discovery phase work one way.
Right but why would VCs want this? Wouldn't VCs value the liquidity of being able to flexibly enter and exit positions? I really wish there were a simple explanation of why companies don't want to IPO as early as they used to but there isn't. The closest I've found when talking to CEOs has been they don't want shareholders putting pressure on them for quarterly results and diluting the company's focus, especially when it's still growing and doesn't have a mature business.
I agree with you and the parent comment, but to be fair to VC, they're also assuming risk. For example, if Wework had IPO'd earlier the public would've been holding the bag instead of private investors.
Companies used to *need* to go public in order to either raise capital or because they were going to have to start publicly reporting anyways due to the number of shareholders.
The JOBS Act and proliferation of double-vesting trigger RSUs effectively negated these forcing functions and 'going public' went from a necessary growing pain to a burden and distraction.
Yeah, I have similar thoughts. If SpaceX's IPO has been a dumpster fire, and share price dropped to the third of its initial value, it would still have been massively overvalued, and made Musk much richer than if they went with a more realistic market cap, and let the market carry them upwards.
I think the fact that we have so little information is the most important information we have. If OpenAI had a sound business plan and was on strong financial footing, they'd have IPO'd.
All of this continued stalling and obfuscation can only mean one thing, IMO: OpenAI has no long-term viability and they're desperately hoping for some new breakthrough to reinvent their business model before the VC money faucets turn off for good.
Sam conceded he had no business plan in 2022 after releasing chatgpt. He even said he doesn't intend to come up with a business model, he would rather wait for the model to reach AGI then ask it to come up with a model.
No he wasn't wearing a red ball on his nose. He didn't even smile saying this. Dead serious.
> OpenAI has no long-term viability and they're desperately hoping for some new breakthrough to reinvent their business model before the VC money faucets turn off for good.
If a startup is riding a hype cycle and is one of two leaders in the global industry with unreal growth numbers, they can IPO whenever they want. The incentives lean toward doing an IPO before the hype runs out, not delaying it.
If they were worried about running out of VC money, going to the public (the P in IPO) would be the move.
Companies don't actually have to go public quickly or even at all, even though that's been drilled into us as the only goal of every investor-backed startup.
> I think the fact that we have so little information is the most important information we have. If OpenAI had a sound business plan and was on strong financial footing, they'd have IPO'd.
There are bits and pieces of info scattered everywhere but no coherent picture. We know from a16z report [1] that only 2% of US households pay for AI subscriptions, so most of the seat based pricing comes from business and enterprise agreements. We know that OpenAI ads business has $1 billion USD in annualised revenue run rate [2]. We know from OpenRouter data [3] that in 2025 70% of the API token spend was across all the proprietary models (Anthropic did very well in 2025, while OpenAI clawed back market share in 2026).
It all starts to look like a very low margins business, and reminds me very much of telecom industry.
What regulation makes it so that a large private company would have to go public? You have it backwards. Increased regulations make it more burdensome for a company to go public, driving companies like OpenAI to remain private. If you made it less expensive and burdensome to IPO (decreased regulation), you would see companies go IPO earlier.
This also coincides with a growing market for private credit and VC which certainly helps companies stay private for longer.
There was a rule[1] pre-2012 that forced public disclosure (akin to listed companies) for private companies when it had >500 shareholder (which counted employees with shares). This made it so that companies had a choice to stay private with all obligation of public disclosure or go public for added benefit of tapping public market.
In 2012 this was relaxed in JOBS Act which relaxed the 500 threshold to 2000 but more importantly it ignored employees so now private companies of gargantuan trillion dollar valuation and thousands of employees have no disclosure requirements.
So, this is a classic case of regulation that did well but was relaxed and now creates hidden risks.
Regulations that limit the ability of investors to invest in private companies, although these have been weakened in recent decades, which helps fuel the growth of private credit markets that allow private companies to stay private.
I'd say it's the growth of private markets to allow companies to keep getting funding even at the $100 billion range while staying private that has fueled the trend to stay private rather than SOX and other new regulations for public corporate governance dissuading them from going public.
It's because reporting requirements changed, in particular employees with stock options no longer counted as shareholders for the purpose of crossing the mandatory reporting threshold.
Before that change companies like MS were in essence forced to IPO, because they'd get all the downsizes of public reporting, without the benefit of accessing market liquidity. So once you were over the threshold, it made no sense to not go all the way.
That's no longer true, and has coincided with a huge expansion in private equity funding growth stage companies vs needing public liquidity. As a result these IPOs being done after their growth stage is largely over are offering the public a very different bet that tech company IPOs of the past.
Meta (formerly Facebook) was forced to take their company public because of how many private investors they had. It’s the Securities Exchange Act of 1934 and also the Jobs Act of 2012 which set these limits (currently 2000 shareholders is the limit). Companies use right of first refusal on their shares to keep the number of shareholders low.
it really is a privatize the gains socialize the losses situation, isn't it? due to the new rules (or lack thereof), public investors didn't have access to all that growth.
no way it ever gives you a return like, say, the amazon IPO could've.
Losses are much more privatized staying private. Instead of hitting people's 401k or pension fund, this is mostly contained to a concentrated set of VC and PE investors, not large public markets.
>Right now we have a ~$1 trillion company which a ton of the “economy” and valuations are based on, with near zero information on how it’s doing.
This is definitely by design and encouraged by the VC’s. It’s disgusting to consider what a simulacrum of a market the stock market has actually become.
> This is an interesting shift compared to the past where OpenAI would’ve been public a long time ago (due to various regulations) so we would have much more direct insight.
There's a good recent YouTube video about the shift in regulations that switched IPOs from being a way to raise money for growth to being a way to dump on retail investors after all the significant growth has been funded by private investors:
I agree with you for sure, but fwiw there’s a simpler alternate explanation, or at least there’s another way of saying the same thing
I’ve asked at rapidlu growing unicorns where I’ve worked “why don’t we ipo” and the big wigs every time just say, “why?”
If the original point of the ipo was to raise money and now you can do that privately, it stands to reason that a simple explanation might be that it’s not worth the hassle until the VC’s say they want their money back
How much money do they have left? It is hard for me to see how OpenAI doesn't fail at this point. There is no business, no moat. Honestly, the best outcome seems like failing up into a Microsoft acquisition at this point.
Any company that would hypothetically acquire them would need to be able to fully - and indefinitely - subsidize their unsustainable operational costs. I don't see how that's realistic even for a company like Microsoft.
The entire US economy is propped up by this bubble, so they will be propped up as much and as long as possible. Basically all money these days is going into this charade, to stop or even slow it down would cause a disastrous collapse
it will fail the day there is a downturn of the economy. That day will be at a 2001 or a 2008 like event - anytime within the next few years (I've no crystal ball, but strong convictions haha).
And yes, they will be acquired by a company which will have survived the next crash at a fraction of their currently estimated valuation and we will truly have the next ride of the economy .. many years ahead if 2001 is an example.
There is a moat: government contracts. Everything from NSF grant reviews, drone warfare, DHS visa processing and Medicare/Medicaid claims processing are up for grabs under the right administration.
Do you know who is not surprised by this? Ed Zitron, and anyone who has read his articles or anyone who have looked into these companies at any level deeper than "AI do cool things! AI must be good investment! AI must make much money!"
Apparently they overstated revenue in an attempt to try to provide a direct comparison with Anthropic's reported metrics.
From the article: "According to a person with knowledge of the matter, the discrepancy arose from attempts by OpenAI’s own investors to produce a direct comparison with Anthropic’s annualised revenues. The pair calculate the figure in different ways, with Anthropic including the revenue from sales via cloud partners such as AWS and Google Cloud, while OpenAI does not.
Efforts to “gross up” OpenAI’s annualised revenue led to reports that the group’s annualised revenue had hit $40bn in August. The company has since told investors its revenues have grown more than 70 per cent, leading to the $70bn figure"
**sorry the gift link can only be viewed 3 times..
>The pair calculate the figure in different ways, with Anthropic including the revenue from sales via cloud partners such as AWS and Google Cloud, while OpenAI does not.
gift link didn't work for me, and is this poorly phrased? because it seems implausible that OpenAI doesn't typically include revenue from their models being used on AWS. Perhaps the "gross up" is referring to how the number is included? like Anthropic was using the value pre-removal of revenue sharing and putting the revenue share subtraction as a separate expense?
[not a finance guy so someone tell me I'm wrong if that's not a plausible reading]
Obviously not the same thing as lying, but Anthropic had also been juicing the revenues with making smart models incredibly verbose. In August my org 3x more in API credits vs July. In September the spend returned to July levels partially because they made models less verbose, but mostly because we've changed how we are using them.
All that tells you is that they haven't at all abandoned the disinformation: Now they are blaming Anthropic for it and trying to shift attention to them.
You can still learn something from it: Look at what they do, not what they say - look at how sophisticated their public communication is. They deliver that information in the perfect manner - not only the redirection and striking a blow against their rival, but they use an anonymous "person with knowledge of the matter": A named source at OpenAI might betray the self-interest in the statement, but some anonymous third party is just reporting what they know.
These guys are very good at it, though that shouldn't surprise you. Look at their product, in one sense a highly effective disinformation machine.
> As OpenAI bides its time, the company is engaging in early stage discussions with investors about a potential new funding round. The company could raise around $30 billion, CNBC previously reported, but that figure could change.
I predicted last month when they launched Luna that they had raised more funding and I suspect this tidbit dropped to CNBC is just prepping the public for a fundraising that’s already happened. There will probably be an announcement this month.
This is pretty much the main point of his frustration.
The world has standardised methods of accounting. Not only do Anthropic and OpenAI avoid using those methods, they both use the same phrase “annualised revenues” to describe two radically different accounting processes.
They’re both also leaking those annualised numbers slowly to the press at irregular intervals, which hints that they’re disclosing new numbers in the days after a big sale lands. So you see “$30bn annualised” because they managed to land a $1bn contract the week before, bumping the annualised figure up by $12bn compared to the start of the previous month, and the end of the next.
Yes, This is the one thing he says that generally resonated with me. A lot of his talking points (harnesses as elaborate rude goldberg machines) read more as exaggerated negative statements supporting a pre-concieved narrative
Zitron complained about a lot of things, one some he was wrong (eg. llm are not useful), on others(eg. "magic accounting" or datacenters ) he has very good points ... but we will see.
He did not say LLMs are not useful, he said they’re valuable for software engineering and could justify a hundred million or billion dollar valuation but not a trillion dollar valuation
No one has rebutted Ed's points. The only rebuttal is "but look how cool AI is!". He mainly sticks to objective facts about their financial situation, and an honest analysis of that situation is dire, regardless of what you think of AI.
> OpenAI is under pressure to justify its $852 billion valuation to investors as it gears up for what is widely expected to be a blockbuster IPO. OpenAI confidentially filed its prospectus with regulators in June, and executives have signaled that the company is eyeing a 2027 debut.
> Anthropic is also readying for a major IPO. The company has not officially disclosed when it plans to debut, but it’s been engaging in meetings with prospective investors and is reportedly seeking a $2 trillion valuation. In August, Anthropic told investors that its annualized revenue run rate hit $65 billion at the end of July.
Is 15 billion annualized (30% more) supposed to justify the $1 trillion+ difference between the two valuations sought in any event? Or are Anthropic's numbers better because of margins or something?
The headline should've been "OpenAI annualised revenues $20B less than previously signalled by us". The FT is just reporting high number to create a story, then a low number to create another story.
> far short of the $70bn reported by the FT and other media outlets late last month based on information that was provided to investors.
Media was mislead by second hand information and misled the public, now they are 'shocked' they reported incorrectly..
Still, seems it is still true that their number is not directly comparable to Anthropic's because they calculate it differently, I think that part still stands and is pretty relevant here.
Stories like these almost always ask for comment from the subject before publishing. If the initial numbers were wrong and OpenAI had a problem with it, they could've responded to the reporters at that time or at publish time, but they didn't. It's highly unlikely the original sourcing wasn't tied to OpenAI.
Sorry Bence I trust the FT journalists to have due diligence w.r.t. what evidence of AR they got from investors (who got it from OpenAI). I completely believe that the company helmed by "not consistently candid" sama bullshits investors about their AR which is the point of this article.
Though I agree with your sentiment that FT is reporting this stuff in a way to stir the pot and create outrage. Speculating about a private company like this is stupid.
FT clearly didn't do their due diligence, since the auxiliary information provided with the $70B leak (about e.g. growth rates and enterprise sales) made it clear that the number could not possibly be correct.
It just wasn't clear exactly what the error was (e.g. was a projection of a $70B ARR by end of year being misinterpreted as $70B ARR now -- that would have been stupid, but less stupid than the "investors added a fudge factor to the numbers" story that they're now going with).
> based on information that was provided to investors.
It was OpenAI spreading their bullshit annualized revenue.
OpenAI and Anthropic always play this silly game to pretend they are in anyway viable. It is always ARR, "adjusted" revenue, etc. "We are profitable when we pretend we don't have expenses".
How does that contradict what parent said? Yes, obviously they are pointing at something for their numbers, but something as vague as "based on information that was provided to investors" might still just be entirely nonsense and is certainly not enough to establish confidence as to the validity of the claim.
>> based on information that was provided to investors.
>It was OpenAI spreading their bullshit annualized revenue.
Did you read the article?
>The discrepancy arose from attempts by OpenAI’s own investors to produce a direct comparison with Anthropic’s annualised revenues, according to a person familiar with the matter. The pair calculate the figure in different ways, with Anthropic including the revenue from sales via cloud partners such as Amazon’s AWS and Google Cloud, while OpenAI does not.
>Investors’ efforts to “gross up” OpenAI’s annualised revenue prompted reports that the figure was around $40bn in July, said the person.
>OpenAI later told its backers that its annualised revenues had jumped more than 70 per cent since July, prompting reports that the figure was about $70bn at the end of September — a number the company did not deny.
>However, the new investor presentation shows close to $30bn annualised revenues in July.
Sounds like what happened wasn't that openai "spreading their bullshit annualized revenue", it was that they gave some vague figure that investors the media and other investors extrapolated, and it turned out that extrapolation was incorrect. Both the $40bn and $70bn figure did not come from openai directly.
For those that care about the truth: This is a non-story.
The $70b estimate was based on a comparison to Anthropic, which includes revenue from cloud providers. OpenAI does not include this in their numbers.
So, the number did not come from OpenAI. It was an accounting mistake made by some investors and media, who did not adjust for this before reporting on it. I see fintwit calling on FT/Axios to issue a retraction; good luck with that.
It sure is interesting to see the rush to judgement in this thread. Another poster correctly pointed out this mistake (now buried under the sea of misinformed posts trending above it.) The Internet is cooked.
"The $70b estimate was based on a comparison to Anthropic" -- Can you prove that? All I could find were major outlets (Reuters, Yahoo Finance) citing an Axios report, that itself cited "sources familiar with the financials tell Axios.". I haven't found anything similar to what you are claiming.
People have a hard time differentiating between bets vs. fraud.
OpenAI is a bet. Maybe a bad bet. Sure. But everyone knows it is a bet. Their investors are experienced and multi-millionaires with teams of analysts. They cannot just act like they are dumb. Not say it's impossible but highly unlikely they can just claim they don't know any better.
SBF was a fraud for using the customers' funds. The customers were promised that their money wouldn't be used for anything. And their customers are average people. Albeit, SBF's investments are pretty godlike based on the current valuations.
Fraud is problematic because it results in harm. Betting in the way Anthropic/OpenAI/Nvidia are is legal, and still incredibly likely to cause harm. So sure, you're technically correct, but the resulting harm that we will all suffer when it all comes crashing down won't be any easier because it was legal...
I’d consider massaging the figures so your “annualised” revenue looks to be 20 billion dollars higher than it is to be on the side of fraudulent rather than betting. And it’s fraudulent because you need to keep pulling in investor cash to keep the thing pumping and afloat, not just dealing with building a decent product and building it out gradually based on what it costs to run and what people will pay for it.
Honest question, everyone really hates annualized revenue, but how else do you measure the revenue for a company that is (presumably) growing so much month over month? You can't just state revenue projections because they are growing too fast for them to ever make much sense.
Obviously for fast-growing companies, they always want to overstate their success to get that next bit of funding (or in OAI, Anthropic's case justify their existing valuation), so what metric should they share to investors?
I'm waiting for the IPO; I was hoping we'd see less news like this prior. I'm not sure if plain shorting, or puts are the correct action; I suspect the former, as timing the latter is not reliable.
judging from SpaceX performance, I think the market can handle a couple more low float high valuation issuances
The public markets have floated multiple names up to $6tr marketcap/valuation
so the debuts at $1tr valuation from the private markets don’t mean anything
pre-IPO investors will just collar like they did SpaceX, nullifying any price volatility for them at the high share price, and giving them all the liquidity collateral they need for borrowing
https://www.sec.gov/Archives/edgar/data/1341439/000119312526... says that in June–August 2026 Oracle made $7.39b from cloud infrastructure, $4.22b from cloud applications (aka their SaaS business), $655m from licensing their software, and $4.9b from support.
The crash of AI hype will be absolutely beautiful. Sure my 401K will probably tank, but this is honestly not the first time. Have plenty of assets not tied to stock market plus plenty of cash.
Although, I suppose that saying, "the market can remain irrational longer than you can be solvent", is more true than ever.
There is a reason we consider annual results. A year is a natural complete cycle. There isn’t equal amount of demand in January as in June for almost any product.
So taking one good week and multiplying it by 52 (or 4 x 13 as the case may be) is at least naïve and realistically — deceptive.
Now let's think for a second about why you would ever want to report it that way. There is not one good reason other than hiding your actual measly revenue.
This is an interesting shift compared to the past where OpenAI would’ve been public a long time ago (due to various regulations) so we would have much more direct insight.
Right now we have a ~$1 trillion company which a ton of the “economy” and valuations are based on, with near zero information on how it’s doing.
It’s because this IPO is backed by those who grew up through the boom and bust of the dotcom era, so they know now to do all their growth in secret behind the scenes and then dump onto the market when there’s nothing more in that tank. Rather than letting the public have any major growth out of their baby, and only letting the price discovery phase work one way.
Right but why would VCs want this? Wouldn't VCs value the liquidity of being able to flexibly enter and exit positions? I really wish there were a simple explanation of why companies don't want to IPO as early as they used to but there isn't. The closest I've found when talking to CEOs has been they don't want shareholders putting pressure on them for quarterly results and diluting the company's focus, especially when it's still growing and doesn't have a mature business.
6 replies →
I agree with you and the parent comment, but to be fair to VC, they're also assuming risk. For example, if Wework had IPO'd earlier the public would've been holding the bag instead of private investors.
10 replies →
That’s actually not why. It’s because of regulations put into place after Enron collapsed that made it harder and more expensive to go public.
Companies used to *need* to go public in order to either raise capital or because they were going to have to start publicly reporting anyways due to the number of shareholders.
The JOBS Act and proliferation of double-vesting trigger RSUs effectively negated these forcing functions and 'going public' went from a necessary growing pain to a burden and distraction.
Yeah, I have similar thoughts. If SpaceX's IPO has been a dumpster fire, and share price dropped to the third of its initial value, it would still have been massively overvalued, and made Musk much richer than if they went with a more realistic market cap, and let the market carry them upwards.
1 reply →
It goes both ways. There are a lot of software companies that VCs poured money into that have turned out to be worth a fraction of the valuations.
What if it's just because the numbers aren't that great at the moment?
> zero information on how it’s doing
I think the fact that we have so little information is the most important information we have. If OpenAI had a sound business plan and was on strong financial footing, they'd have IPO'd.
All of this continued stalling and obfuscation can only mean one thing, IMO: OpenAI has no long-term viability and they're desperately hoping for some new breakthrough to reinvent their business model before the VC money faucets turn off for good.
Sam conceded he had no business plan in 2022 after releasing chatgpt. He even said he doesn't intend to come up with a business model, he would rather wait for the model to reach AGI then ask it to come up with a model.
No he wasn't wearing a red ball on his nose. He didn't even smile saying this. Dead serious.
1 reply →
> If OpenAI had a sound business plan and was on strong financial footing, they'd have IPO'd.
OTOH, if a company has a sound business plan and strong financial footing it may not need to IPO -- unless the founders or VCers want out ASAP.
21 replies →
> OpenAI has no long-term viability and they're desperately hoping for some new breakthrough to reinvent their business model before the VC money faucets turn off for good.
If a startup is riding a hype cycle and is one of two leaders in the global industry with unreal growth numbers, they can IPO whenever they want. The incentives lean toward doing an IPO before the hype runs out, not delaying it.
If they were worried about running out of VC money, going to the public (the P in IPO) would be the move.
Companies don't actually have to go public quickly or even at all, even though that's been drilled into us as the only goal of every investor-backed startup.
3 replies →
> I think the fact that we have so little information is the most important information we have. If OpenAI had a sound business plan and was on strong financial footing, they'd have IPO'd.
What about Stripe?
The same is true for Anthropic, by the way.
29 replies →
“The plan is to invent AGI and then task it with working out how to make money”
There are bits and pieces of info scattered everywhere but no coherent picture. We know from a16z report [1] that only 2% of US households pay for AI subscriptions, so most of the seat based pricing comes from business and enterprise agreements. We know that OpenAI ads business has $1 billion USD in annualised revenue run rate [2]. We know from OpenRouter data [3] that in 2025 70% of the API token spend was across all the proprietary models (Anthropic did very well in 2025, while OpenAI clawed back market share in 2026).
It all starts to look like a very low margins business, and reminds me very much of telecom industry.
[1] https://www.a16z.news/p/state-of-markets-ii
[2] https://www.reuters.com/business/media-telecom/openais-ad-bu...
[3] https://openrouter.ai/state-of-ai
Nobody is quiet about doing well. And the frenetic release schedule of kinda half baked products tells a story (not a good one)
What regulation makes it so that a large private company would have to go public? You have it backwards. Increased regulations make it more burdensome for a company to go public, driving companies like OpenAI to remain private. If you made it less expensive and burdensome to IPO (decreased regulation), you would see companies go IPO earlier.
This also coincides with a growing market for private credit and VC which certainly helps companies stay private for longer.
There was a rule[1] pre-2012 that forced public disclosure (akin to listed companies) for private companies when it had >500 shareholder (which counted employees with shares). This made it so that companies had a choice to stay private with all obligation of public disclosure or go public for added benefit of tapping public market.
In 2012 this was relaxed in JOBS Act which relaxed the 500 threshold to 2000 but more importantly it ignored employees so now private companies of gargantuan trillion dollar valuation and thousands of employees have no disclosure requirements.
So, this is a classic case of regulation that did well but was relaxed and now creates hidden risks.
[1]: https://www.investopedia.com/terms/5/500-shareholder-thresho...
5 replies →
Regulations that limit the ability of investors to invest in private companies, although these have been weakened in recent decades, which helps fuel the growth of private credit markets that allow private companies to stay private.
I'd say it's the growth of private markets to allow companies to keep getting funding even at the $100 billion range while staying private that has fueled the trend to stay private rather than SOX and other new regulations for public corporate governance dissuading them from going public.
1 reply →
It's because reporting requirements changed, in particular employees with stock options no longer counted as shareholders for the purpose of crossing the mandatory reporting threshold.
Before that change companies like MS were in essence forced to IPO, because they'd get all the downsizes of public reporting, without the benefit of accessing market liquidity. So once you were over the threshold, it made no sense to not go all the way.
That's no longer true, and has coincided with a huge expansion in private equity funding growth stage companies vs needing public liquidity. As a result these IPOs being done after their growth stage is largely over are offering the public a very different bet that tech company IPOs of the past.
> What regulation makes it so that a large private company would have to go public?
My guess would be - oxytocin, cortisol and dopamine regulation, or rather the failure of said regulation.
Meta (formerly Facebook) was forced to take their company public because of how many private investors they had. It’s the Securities Exchange Act of 1934 and also the Jobs Act of 2012 which set these limits (currently 2000 shareholders is the limit). Companies use right of first refusal on their shares to keep the number of shareholders low.
it really is a privatize the gains socialize the losses situation, isn't it? due to the new rules (or lack thereof), public investors didn't have access to all that growth.
no way it ever gives you a return like, say, the amazon IPO could've.
What are you talking about?
Losses are much more privatized staying private. Instead of hitting people's 401k or pension fund, this is mostly contained to a concentrated set of VC and PE investors, not large public markets.
1 reply →
What past regulations would have forced OpenAI to go public sooner?
>Right now we have a ~$1 trillion company which a ton of the “economy” and valuations are based on, with near zero information on how it’s doing.
This is definitely by design and encouraged by the VC’s. It’s disgusting to consider what a simulacrum of a market the stock market has actually become.
> This is an interesting shift compared to the past where OpenAI would’ve been public a long time ago (due to various regulations) so we would have much more direct insight.
There's a good recent YouTube video about the shift in regulations that switched IPOs from being a way to raise money for growth to being a way to dump on retail investors after all the significant growth has been funded by private investors:
https://www.youtube.com/watch?v=roe3SgezmmU
They would go public if they were doing well.
I agree with you for sure, but fwiw there’s a simpler alternate explanation, or at least there’s another way of saying the same thing
I’ve asked at rapidlu growing unicorns where I’ve worked “why don’t we ipo” and the big wigs every time just say, “why?”
If the original point of the ipo was to raise money and now you can do that privately, it stands to reason that a simple explanation might be that it’s not worth the hassle until the VC’s say they want their money back
How much money do they have left? It is hard for me to see how OpenAI doesn't fail at this point. There is no business, no moat. Honestly, the best outcome seems like failing up into a Microsoft acquisition at this point.
They’re raising another $30B:
https://www.reuters.com/legal/transactional/openai-targets-3...
Any company that would hypothetically acquire them would need to be able to fully - and indefinitely - subsidize their unsustainable operational costs. I don't see how that's realistic even for a company like Microsoft.
The entire US economy is propped up by this bubble, so they will be propped up as much and as long as possible. Basically all money these days is going into this charade, to stop or even slow it down would cause a disastrous collapse
1 reply →
it will fail the day there is a downturn of the economy. That day will be at a 2001 or a 2008 like event - anytime within the next few years (I've no crystal ball, but strong convictions haha).
And yes, they will be acquired by a company which will have survived the next crash at a fraction of their currently estimated valuation and we will truly have the next ride of the economy .. many years ahead if 2001 is an example.
2 replies →
There is a moat: government contracts. Everything from NSF grant reviews, drone warfare, DHS visa processing and Medicare/Medicaid claims processing are up for grabs under the right administration.
What’s it called when you misstate revenue while also taking money from investors?
It's called we're lucky we're not listed
I think it’s technically called securities fraud.
OpenAI is just Netscape at this point
Do you know who is not surprised by this? Ed Zitron, and anyone who has read his articles or anyone who have looked into these companies at any level deeper than "AI do cool things! AI must be good investment! AI must make much money!"
Gift link: https://giftarticle.ft.com/giftarticle/actions/redeem/f77156...
Apparently they overstated revenue in an attempt to try to provide a direct comparison with Anthropic's reported metrics.
From the article: "According to a person with knowledge of the matter, the discrepancy arose from attempts by OpenAI’s own investors to produce a direct comparison with Anthropic’s annualised revenues. The pair calculate the figure in different ways, with Anthropic including the revenue from sales via cloud partners such as AWS and Google Cloud, while OpenAI does not. Efforts to “gross up” OpenAI’s annualised revenue led to reports that the group’s annualised revenue had hit $40bn in August. The company has since told investors its revenues have grown more than 70 per cent, leading to the $70bn figure"
**sorry the gift link can only be viewed 3 times..
> Apparently they overstated revenue in an attempt to try to provide a direct comparison with Anthropic's reported metrics.
Just to clarify from my understanding of the quote, "they" here is openai investors, not openai.
The people who are currently holding the bag but would maybe like not to be holding the bag decided it was worth more?
[dead]
>The pair calculate the figure in different ways, with Anthropic including the revenue from sales via cloud partners such as AWS and Google Cloud, while OpenAI does not.
gift link didn't work for me, and is this poorly phrased? because it seems implausible that OpenAI doesn't typically include revenue from their models being used on AWS. Perhaps the "gross up" is referring to how the number is included? like Anthropic was using the value pre-removal of revenue sharing and putting the revenue share subtraction as a separate expense?
[not a finance guy so someone tell me I'm wrong if that's not a plausible reading]
https://www.axios.com/2026/09/03/anthropic-and-openais-reven...
Obviously not the same thing as lying, but Anthropic had also been juicing the revenues with making smart models incredibly verbose. In August my org 3x more in API credits vs July. In September the spend returned to July levels partially because they made models less verbose, but mostly because we've changed how we are using them.
> Apparently they overstated revenue in an attempt to try to provide a direct comparison with Anthropic's reported metrics.
I'm confident both companies are lying about their revenues.
By how much do you think they are lying?
Good news for you then my confident friend, as once Anthropic IPO you'll be able to become very rich putting your money where your mouth is.
4 replies →
The link doesn't work.
Ok, we've swapped the submitted URL (https://www.ft.com/content/b66a9858-f8fb-46cb-b506-44bfe26fc...) for a non-paywalled article above.
All that tells you is that they haven't at all abandoned the disinformation: Now they are blaming Anthropic for it and trying to shift attention to them.
You can still learn something from it: Look at what they do, not what they say - look at how sophisticated their public communication is. They deliver that information in the perfect manner - not only the redirection and striking a blow against their rival, but they use an anonymous "person with knowledge of the matter": A named source at OpenAI might betray the self-interest in the statement, but some anonymous third party is just reporting what they know.
These guys are very good at it, though that shouldn't surprise you. Look at their product, in one sense a highly effective disinformation machine.
They can afford, and need, the best bullshitters on the planet.
>Look at their product, in one sense a highly effective disinformation machine.
What do you mean by this?
1 reply →
> As OpenAI bides its time, the company is engaging in early stage discussions with investors about a potential new funding round. The company could raise around $30 billion, CNBC previously reported, but that figure could change.
I predicted last month when they launched Luna that they had raised more funding and I suspect this tidbit dropped to CNBC is just prepping the public for a fundraising that’s already happened. There will probably be an announcement this month.
Does this align with what Zitron was complaining about? Or is it a broken-clock-right-twice-a-day thing? neutral question.
This is pretty much the main point of his frustration.
The world has standardised methods of accounting. Not only do Anthropic and OpenAI avoid using those methods, they both use the same phrase “annualised revenues” to describe two radically different accounting processes.
They’re both also leaking those annualised numbers slowly to the press at irregular intervals, which hints that they’re disclosing new numbers in the days after a big sale lands. So you see “$30bn annualised” because they managed to land a $1bn contract the week before, bumping the annualised figure up by $12bn compared to the start of the previous month, and the end of the next.
Yes, This is the one thing he says that generally resonated with me. A lot of his talking points (harnesses as elaborate rude goldberg machines) read more as exaggerated negative statements supporting a pre-concieved narrative
1 reply →
Zitron complained about a lot of things, one some he was wrong (eg. llm are not useful), on others(eg. "magic accounting" or datacenters ) he has very good points ... but we will see.
He did not say LLMs are not useful, he said they’re valuable for software engineering and could justify a hundred million or billion dollar valuation but not a trillion dollar valuation
No one has rebutted Ed's points. The only rebuttal is "but look how cool AI is!". He mainly sticks to objective facts about their financial situation, and an honest analysis of that situation is dire, regardless of what you think of AI.
Both. But he’s going to be insufferable if the market does go pop.
> OpenAI is under pressure to justify its $852 billion valuation to investors as it gears up for what is widely expected to be a blockbuster IPO. OpenAI confidentially filed its prospectus with regulators in June, and executives have signaled that the company is eyeing a 2027 debut.
> Anthropic is also readying for a major IPO. The company has not officially disclosed when it plans to debut, but it’s been engaging in meetings with prospective investors and is reportedly seeking a $2 trillion valuation. In August, Anthropic told investors that its annualized revenue run rate hit $65 billion at the end of July.
Is 15 billion annualized (30% more) supposed to justify the $1 trillion+ difference between the two valuations sought in any event? Or are Anthropic's numbers better because of margins or something?
It signals Anthropic is growing faster than OpenAI, and the market still feels the upside of AI is that it will eat all software and services.
Good point. I didn't think about growth rates here which is probably the whole game.
Sam Altman genuinely needs to be exiled as far away from openai if they want to have a chance with it's rising competitors
I'm now pro sam altman
The headline should've been "OpenAI annualised revenues $20B less than previously signalled by us". The FT is just reporting high number to create a story, then a low number to create another story.
Exactly.
Media was mislead by second hand information and misled the public, now they are 'shocked' they reported incorrectly..
Still, seems it is still true that their number is not directly comparable to Anthropic's because they calculate it differently, I think that part still stands and is pretty relevant here.
Stories like these almost always ask for comment from the subject before publishing. If the initial numbers were wrong and OpenAI had a problem with it, they could've responded to the reporters at that time or at publish time, but they didn't. It's highly unlikely the original sourcing wasn't tied to OpenAI.
1 reply →
Sorry Bence I trust the FT journalists to have due diligence w.r.t. what evidence of AR they got from investors (who got it from OpenAI). I completely believe that the company helmed by "not consistently candid" sama bullshits investors about their AR which is the point of this article.
Though I agree with your sentiment that FT is reporting this stuff in a way to stir the pot and create outrage. Speculating about a private company like this is stupid.
FT clearly didn't do their due diligence, since the auxiliary information provided with the $70B leak (about e.g. growth rates and enterprise sales) made it clear that the number could not possibly be correct.
It just wasn't clear exactly what the error was (e.g. was a projection of a $70B ARR by end of year being misinterpreted as $70B ARR now -- that would have been stupid, but less stupid than the "investors added a fudge factor to the numbers" story that they're now going with).
1 reply →
No. You should read the article
> based on information that was provided to investors.
It was OpenAI spreading their bullshit annualized revenue.
OpenAI and Anthropic always play this silly game to pretend they are in anyway viable. It is always ARR, "adjusted" revenue, etc. "We are profitable when we pretend we don't have expenses".
OpenAI only provided the 70% increase figure. The investors were assuming a $40bn base number, which the media then took to mean the ARR is now 70bn.
Its comically bad how this circus is playing out.
How does that contradict what parent said? Yes, obviously they are pointing at something for their numbers, but something as vague as "based on information that was provided to investors" might still just be entirely nonsense and is certainly not enough to establish confidence as to the validity of the claim.
2 replies →
>No. You should read the article
>> based on information that was provided to investors.
>It was OpenAI spreading their bullshit annualized revenue.
Did you read the article?
>The discrepancy arose from attempts by OpenAI’s own investors to produce a direct comparison with Anthropic’s annualised revenues, according to a person familiar with the matter. The pair calculate the figure in different ways, with Anthropic including the revenue from sales via cloud partners such as Amazon’s AWS and Google Cloud, while OpenAI does not.
>Investors’ efforts to “gross up” OpenAI’s annualised revenue prompted reports that the figure was around $40bn in July, said the person.
>OpenAI later told its backers that its annualised revenues had jumped more than 70 per cent since July, prompting reports that the figure was about $70bn at the end of September — a number the company did not deny.
>However, the new investor presentation shows close to $30bn annualised revenues in July.
Sounds like what happened wasn't that openai "spreading their bullshit annualized revenue", it was that they gave some vague figure that investors the media and other investors extrapolated, and it turned out that extrapolation was incorrect. Both the $40bn and $70bn figure did not come from openai directly.
“However, the new investor presentation shows close to $30bn annualised revenues in July.”
2.5bn in revenue for all of July. That is a disaster.
Squeaky bum time
For those that care about the truth: This is a non-story.
The $70b estimate was based on a comparison to Anthropic, which includes revenue from cloud providers. OpenAI does not include this in their numbers.
So, the number did not come from OpenAI. It was an accounting mistake made by some investors and media, who did not adjust for this before reporting on it. I see fintwit calling on FT/Axios to issue a retraction; good luck with that.
It sure is interesting to see the rush to judgement in this thread. Another poster correctly pointed out this mistake (now buried under the sea of misinformed posts trending above it.) The Internet is cooked.
"The $70b estimate was based on a comparison to Anthropic" -- Can you prove that? All I could find were major outlets (Reuters, Yahoo Finance) citing an Axios report, that itself cited "sources familiar with the financials tell Axios.". I haven't found anything similar to what you are claiming.
Well, Axios are now reporting this themselves: https://www.axios.com/2026/10/08/openai-50-billion-arr-anthr...
Also bear in mind that the original $70b number came from an 'anonymous' source to Axios.
1 reply →
Sam A = SBF 2.0
When the dust settles, I reckon OAI will make FTX's losses look like chump change
When the dust settles, the housing bubble of '08 will look like chump change.
2 replies →
I doubt it.
People have a hard time differentiating between bets vs. fraud.
OpenAI is a bet. Maybe a bad bet. Sure. But everyone knows it is a bet. Their investors are experienced and multi-millionaires with teams of analysts. They cannot just act like they are dumb. Not say it's impossible but highly unlikely they can just claim they don't know any better.
SBF was a fraud for using the customers' funds. The customers were promised that their money wouldn't be used for anything. And their customers are average people. Albeit, SBF's investments are pretty godlike based on the current valuations.
Fraud is problematic because it results in harm. Betting in the way Anthropic/OpenAI/Nvidia are is legal, and still incredibly likely to cause harm. So sure, you're technically correct, but the resulting harm that we will all suffer when it all comes crashing down won't be any easier because it was legal...
I’d consider massaging the figures so your “annualised” revenue looks to be 20 billion dollars higher than it is to be on the side of fraudulent rather than betting. And it’s fraudulent because you need to keep pulling in investor cash to keep the thing pumping and afloat, not just dealing with building a decent product and building it out gradually based on what it costs to run and what people will pay for it.
Honest question, everyone really hates annualized revenue, but how else do you measure the revenue for a company that is (presumably) growing so much month over month? You can't just state revenue projections because they are growing too fast for them to ever make much sense.
Obviously for fast-growing companies, they always want to overstate their success to get that next bit of funding (or in OAI, Anthropic's case justify their existing valuation), so what metric should they share to investors?
Who hates annualized revenue?
Monthly revenue?
Wait… this is about their annualized run rate, not their actual annual recurring revenue?
Even their hokey run rate figure is falling?
As NVIDIA hits it's highest price per share... like clockwork.
I mean, if you picked almost any random time in the last 4 years that'd be true.
I'm waiting for the IPO; I was hoping we'd see less news like this prior. I'm not sure if plain shorting, or puts are the correct action; I suspect the former, as timing the latter is not reliable.
The margin call will be brutal if you’re wrong and it takes a few more years than you thought for the trend to break.
judging from SpaceX performance, I think the market can handle a couple more low float high valuation issuances
The public markets have floated multiple names up to $6tr marketcap/valuation
so the debuts at $1tr valuation from the private markets don’t mean anything
pre-IPO investors will just collar like they did SpaceX, nullifying any price volatility for them at the high share price, and giving them all the liquidity collateral they need for borrowing
>> "Oracle ... and other artificial intelligence companies"
Uhm, that's definitely not their business, despite what they want to you to believe.
https://www.sec.gov/Archives/edgar/data/1341439/000119312526... says that in June–August 2026 Oracle made $7.39b from cloud infrastructure, $4.22b from cloud applications (aka their SaaS business), $655m from licensing their software, and $4.9b from support.
Sorry, is this meant to be a confirmation or a rebuttal of GP's statement?
1 reply →
You don’t say…
Anyway, if I had a hundred bucks to burn, I’d bet this is a move to undermine Anthropic’s IPO.
They don't need help, as most firms with that much red on the books shouldn't be allowed to float an IPO based on fictional future growth forecasts.
IMHO, the Bears will be proven right on this one sooner or later. =3
Is there any understanding of how it's even 50b? Makes no sense to me.
It is rarely a challenge to turn $100 into $50.
[dead]
My team at my company alone burned through $100k worth of tokens in September.
When it hit $20k it triggered a talk with management, but ultimately they decided it was worth because of the value the LLM was providing.
My employer is paying thousands per month for my tokens. Multiply that by a million people and there’s your $50B per year.
You might ask: how could this possibly pencil out for my employer? Answer: I’m the only person left on what used to be a team.
Nvidia’s revenue is more than that per quarter, the demand for AI workloads is through the roof.
Yeah, take your most profitable day/week/month and multiple it by 365/52/12.
They can be more creative than that, they can get their most profitable hour and multiply by 8760.
So much ARR.
Phone call for Ms. Friar.
The crash of AI hype will be absolutely beautiful. Sure my 401K will probably tank, but this is honestly not the first time. Have plenty of assets not tied to stock market plus plenty of cash.
Although, I suppose that saying, "the market can remain irrational longer than you can be solvent", is more true than ever.
It's funny because this is the same thing that startups do all the time
yeah because every startup that does this is asking for 2trillion dollar evaluation, lol lmao even
Does any company besides OpenAI get to misreport $20b in revenue and still get taken seriously?
Maybe Anthropic.
I imagine, when your company grew astronomically fast to the level that was unseen in the past, the investors would be a lot more forgiving.
Annualised revenue is bullshit revenue for the gullible.
My anuallized revenue is about 4.5M. I just need now to get a salary every day.
The annualized their revenue based on a single day! So yes, total bullshit.
And the sad fact is even though they did this, they were still 20 billion too low.
Not only will this never be an IPO, this is a signal of a collapse of the economy
“Annualized revenues” is the same as “oh you got married? At this rate by next year you’ll have 500 husbands”
https://m.xkcd.com/605/
There is a reason we consider annual results. A year is a natural complete cycle. There isn’t equal amount of demand in January as in June for almost any product.
So taking one good week and multiplying it by 52 (or 4 x 13 as the case may be) is at least naïve and realistically — deceptive.
Now let's think for a second about why you would ever want to report it that way. There is not one good reason other than hiding your actual measly revenue.
Not a good day for OpenAI!
Not a good day for the entire Nasdaq thanks to Scam A and his magic numbers.
What's plus or minus $20bn between friends?
1 reply →
the models are extremely dumb today too, sol 6.1 in particular