OpenAI Eyes $500B Valuation in Employee Share Sale Talks
OpenAI, the creator of the popular ChatGPT, is reportedly engaged in early-stage discussions for an employee stock sale that could catapult its valuation to an astonishing $500 billion. This potential move would represent a substantial increase from its current $300 billion valuation, underscoring both the company’s meteoric rise in user adoption and revenue, as well as the intense global competition for top-tier artificial intelligence talent.
The proposed transaction, which would precede a potential initial public offering (IPO), aims to allow both current and former employees to sell shares worth several billion dollars. This liquidity event is a common strategy for rapidly growing private companies to reward early contributors and attract new talent in a highly competitive market.
OpenAI’s financial performance provides a clear rationale for such an ambitious valuation. Bolstered by its flagship product, ChatGPT, the company doubled its revenue in the first seven months of the year, reaching an annualized run rate of $12 billion, and is projected to hit $20 billion by year-end. This impressive financial trajectory is mirrored in its user base, with Microsoft-backed OpenAI now boasting approximately 700 million weekly active users for its ChatGPT products, a significant surge from around 400 million in February.
These internal share sale discussions follow OpenAI’s primary funding round announced earlier this year, an ambitious effort to raise $40 billion, led by Japan’s SoftBank Group. While SoftBank has until the close of the year to fund its $22.5 billion portion of this round, the remainder has already been subscribed at a $300 billion valuation, indicating strong investor confidence. Existing investors, including Thrive Capital, are reportedly in discussions to participate in the employee share sale, further solidifying the company’s financial backing.
The valuation surge also highlights the fierce competition for top-tier artificial intelligence talent, with tech giants aggressively vying for experts through lucrative compensation packages. For instance, Meta is reportedly investing billions in Scale AI, aiming to recruit its 28-year-old CEO, Alexandr Wang, to lead its new super intelligence unit. Unlisted firms like ByteDance, Databricks, and Ramp have similarly leveraged private share sales as a mechanism to update company valuations and reward long-term employees, a strategy OpenAI appears to be adopting to retain its valuable workforce.
Beyond the immediate financial implications, OpenAI is reportedly undertaking a significant corporate restructuring designed to transition away from its current capped-profit model. This strategic shift could pave the way for a future initial public offering, allowing broader public investment. However, Chief Financial Officer Sarah Friar cautioned in May that an IPO would only materialize when both the company and market conditions are deemed ready, signaling a measured approach to its long-term public market debut.