OpenAI has bought back $7 billion worth of stock from employees of its privately held Frontier AI Labs as part of an effort to provide liquidity to its employees.
The deal, reported by Bloomberg, valued OpenAI at $852 billion, the same as its most recent funding round in March, and increased the company’s war chest by $122 billion.
The company also filed a confidential filing with the Securities and Exchange Commission in June in preparation for a possible IPO later this year. However, the tender offer suggests that an IPO may not happen soon. As many tech companies remain privately held longer than previous generations of startups, private bids have proven to be a useful way for companies to help employees realize the value of stock compensation without the challenges associated with going public.
OpenAI did not respond to a request for comment by the time of publication.
Last month, OpenAI CEO Sam Altman wrote, “It’s mainly my fault that we didn’t have the best 12 months ever, but we’re about to have the best 12 months ever.” Companies that go public typically want to show strong financial results to get investors on board, and the Wall Street Journal reported in April that the company had missed internal financial goals.
While OpenAI’s tremendous growth and product could generate significant interest in the public markets, the potential debut of rival Anthropic (which reportedly turned a profit earlier this year) gives the company reason to be on its best footing. The bid could be another signal that the long-awaited product will wait for OpenAI’s new strategy to reduce stakes and focus on its enterprise business to gain traction.
