ChatGPT maker OpenAI’s share sale hangs in the balance as investors and the public look forward to the much-awaited share sale offering. The whole saga of the ouster and reinstatement of founder and CEO Sam Altman might have hurt the company’s valuation. The value of the share sale was set close to $86 billion before Altman’s ouster. If speculations are to be believed, the valuation could have even hit $100 billion sans the drama.
Initial backers of the artificial intelligence (AI) firm, including Khosla Ventures, Thrive Capital, and Sequoia Capital, are analyzing the events as the firm nears the proposed share sale.
Recent Drama Impacted OpenAI’s Image
The recent turmoil has raised questions about OpenAI’s governance structure and dwindled investor confidence. Although investors are happy that Altman is back to leading the generating AI firm, the removal of three directors and the investigation into Altman’s conduct still put pressure on the firm’s performance.
Vinod Khosla of Khosla Ventures thinks that the recent saga almost destroyed a lot of value in the short term, although it’s difficult to predict its impact ahead. “Valuation is a function of investor perceptions. The company is the same or better off than it was last Thursday,” added Khosla.
Interestingly, tech giant Microsoft (NASDAQ:MSFT), which showed continued support to Altman during the few days of his removal, is also weighing how the whole drama has impacted the company. Nonetheless, the current valuation estimate for OpenAI is almost triple the $29 billion valuation assigned when MSFT made the initial investment of $10 billion.
What is a Good Price for MSFT?
Following Altman’s return to OpenAI, Mizuho Securities analyst Gregg Moskowitz reiterated a Buy rating on MSFT with a price target of $420 (11.3% upside potential). The five-star analyst was relieved by the news and expects the MSFT-OpenAI partnership to benefit the company in the medium to long term. Moskowitz says that OpenAI’s generative AI monetization benefits are larger than many realize, driving his bullish stance on the stock.
Overall, MSFT scores a Strong Buy consensus rating based on 32 Buys and one Hold rating. The average Microsoft price forecast of $410.03 implies 8.6% upside potential from current levels. Year-to-date, MSFT has gained nearly 59%.
