SoftBank stock plunges as a report says OpenAI is pushing back its IPO

Bankers advising OpenAI reportedly cautioned that volatility in tech stocks could weaken demand for an offering. By October, SoftBank's total commitment to the ChatGPT maker is expected to hit approximately $65 billion. The prospect of a major payday from OpenAI going public had lifted the Japanese company's shares to all-time highs — enough to push its market capitalization past that of Toyota $TM Motor Corp. last month.

Investor enthusiasm for SoftBank may also be capped by concerns that OpenAI could struggle to secure demand at a $1 trillion valuation, according to CNBC. Friday's decline was SoftBank's largest intraday drop in more than three months.

According to Hiroki Takei, a strategist at Resona Holdings, who spoke to Bloomberg, SoftBank's portfolio is unusually difficult to value because it encompasses hundreds of companies with no public market price. A listed OpenAI would serve as a benchmark for one of its largest positions, potentially narrowing the conglomerate discount that has long weighed on the stock, Takei said. "News of an IPO delay naturally dampens those expectations," he said.

Goldman Sachs $GS Group and Morgan Stanley $MS are advising OpenAI on a possible public offering that could come as early as this fall, noting that the company has already filed confidential listing documents with U.S. securities regulators.

SoftBank's exposure to OpenAI sits at the center of a complex financial picture the company has been navigating for months. An effort by SoftBank to raise at least $6 billion through a margin loan collateralized by its OpenAI holdings stalled earlier this month, with lenders citing difficulty pricing a stake in a private company with no public market valuation. SoftBank also carries a $40 billion bridge loan it took on to fund its OpenAI commitments, with repayment due in March 2027.

The Vision Fund arm of SoftBank recorded roughly $46 billion in investment gains over the 12 months through March 31, driven almost entirely by a rising valuation on its OpenAI holdings. The fair value of SoftBank's total OpenAI investment reached $79.6 billion at year-end, against a cumulative investment cost of $34.6 billion.

Friday's selloff in SoftBank stock unfolded alongside a broader retreat in Asian and European technology shares, as investors also weighed the impact of rising AI infrastructure costs following Apple $AAPL's announcement of price increases on some MacBook and iPad products.