OpenAI investors approached the company about a new funding round. The company already filed confidentially for an IPO in June. These investors want to give OpenAI more money before OpenAI asks the public for money. This is called strategy.
The investors looked at a company preparing to go public and thought: what if we bought in now at a private valuation instead of waiting three months to buy at whatever price the market sets? Groundbreaking stuff. Real Mensa-level thinking. Someone get these guys a whiteboard.
OpenAI filed its IPO paperwork in June. It's now September. The company has not yet gone public. In that gap, investors approached them about another funding round. They want preferred shares with downside protection before you get common shares with downside exposure. They want the deal before the deal. They want to pay tomorrow's premium at today's discount and stick you with the valuation haircut when the lockup expires.
This is what passes for news in financial media. Investors want to invest. Companies want funding. The IPO is coming. Maybe next year. Maybe later. Maybe the investors get their round. Maybe they don't. Maybe you should care. Maybe you shouldn't.
Retail traders will read this headline and think it means something bullish. They'll see "new funding round" and "blockbuster IPO" in the same paragraph and assume both are good signs. They'll ignore that private investors are trying to cut in line ahead of the public offering. They'll ignore what that says about who gets the discount and who gets the bag.
The chart doesn't care about funding rounds. The chart doesn't care about confidential filings. The chart doesn't know what OpenAI does and wouldn't change direction if it did. But sure, let this be the headline that finally makes financial news relevant to price action.
Smart money wants in before dumb money gets the chance. Tale as old as markets themselves.
Photo by Levart_Photographer on Unsplash
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