Why OpenAI, Anthropic and Oura Have Delayed Their IPOs

Why are so many hotly anticipated tech IPOs getting pushed back, and how should retail investors think about these companies? I talked to three IPO experts at some of the country’s most prominent universities to find out.

“Market volatility has really picked up,” says Dr. Reena Aggarwal, director of the Psaros Center for Financial Markets and Policy at Georgetown University.

“Part of that is driven by the high-interest-rate environment that we’re in. That’s causing problems,” Aggarwal says.

Rising interest rates increase borrowing costs, which can eat into the bottom lines of publicly traded companies (especially those that aren’t profitable yet) and make investors more risk-averse. Case in point: The S&P 500 was almost completely flat for the month of September, as down days canceled out up days.

And while SpaceX raised a record-breaking amount of money in its IPO this summer, it’s had a bumpy ride since then, and still trades below its day-one closing price. That, too, may be spooking future IPO hopefuls. “It was trading at far below the offer price before it again picked up. That doesn’t send a strong signal to the market,” Aggarwal says.

According to Dr. Michael Ewens, the director of the Private Equity Program at Columbia Business School, there are also company-specific reasons for the recent IPO delays.

“OpenAI, Oura, all of these companies are hiring banks to go out and figure out demand for their shares. They’re getting peppered with questions, like ‘What do you expect margins to be in the next 10 years? What’s your capital expenditure? Is revenue growth flowing?’” Ewens says.

“Those questions may not have the best answers. And then you get hesitancy from the large institutional investors, like mutual funds, who have to put up the money in the IPO, and that can make you pull back,” he says.

Dr. Jay Ritter, director of the IPO Initiative at the University of Florida Warrington College of Business, concurred in an email interview that some companies simply realized that they’re not ready to go public.

“With Oura, the company was trying to get a higher price than investors were willing to pay. This was the problem with the postponed Bamboo Insurance IPO a few weeks ago, too. Both are great companies, but Oura will have a difficult time maintaining its recent growth rate,” Ritter said.

“Other consumer product companies, including GoPro, Peloton, and SoulCycle (it attempted to go public in 2015), have been unable to continue their rapid growth. Investors are concerned about paying for growth that may not materialize,” he said.

Ritter and Aggarwal both added that safety concerns around OpenAI and Anthropic’s products have added to the IPO headwinds.

“OpenAI is not rushing its IPO because of the need to add safeguards in its latest large language models, to reduce the probability that the models will do something really bad, or that a bad actor will use them to create immense damage,” Ritter said.

According to Aggarwal, companies will likely wait for market volatility to die down before proceeding with their IPOs, which is hard to estimate a timeframe for.

Ewens says that there’s a good chance most IPOs will wait until the new year or even the spring, for a couple of reasons: The midterm elections and the holiday season.

“I would suspect that some of these firms are factoring in the major changes that could occur if Congress flips. Regulatory changes, extra scrutiny,” Ewens says.

We’re also coming up on a seasonal IPO roadblock. “Holidays matter. December tends to be slow, January even slower,” Ewens adds.

But on top of that, the potential to make money on an unusually strong IPO may have decreased over time, according to Aggarwal.

That’s because a lot has changed in how IPOs work. On the one hand, some brokerages now offer IPO shares — which were once only available to institutions — directly to retail investors.

But on the other hand, companies are doing a lot more private-market fundraising than they used to (sometimes using online platforms which are only available to accredited investors), which means that ordinary retail investors are still left out from some of the best early entry points.

“In the old days, all the price discovery used to happen when the IPO took place. But now there are so many funding rounds happening before the IPO that a lot of price discovery has happened already. So the big bump-up in price is happening early on, and so if retail investors don’t have access to that, then they’re missing out on that piece,” Aggarwal says.

“A lot of the upside is happening in the private markets, before the company goes public,” she says.

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