Valuation Collapse? SoftBank Denied Loan On OpenAI Stake

One of the points I’ve made in recent posts urging readers not to ignore recent market selloffs was that credit markets are quietly sending warning signals that most investors continue to ignore. While equities remain near highs and AI enthusiasm still somehow dominates headlines, conditions beneath the surface are becoming increasingly selective. New reporting today keep furthering that narrative.

Bloomberg reported today that SoftBank’s attempt to raise at least $6 billion through a margin loan backed by its OpenAI stake has stalled after previously reducing the target from $10 billion. According to the report, potential lenders had expressed concerns about valuing OpenAI’s private shares, and despite SoftBank reportedly securing interest for much of the financing, discussions have paused while the company explores other funding alternatives.

Deteriorating valuation on a stake of a private AI company with plans to go public sounds like it sure might be relevant to the forthcoming SpaceX IPO, no? Especially if you believe, like me, that this IPO is going to be a referendum on the entire AI bubble.

One of the recurring themes I’ve been hammering on for months is that liquidity conditions are not nearly as abundant as headline equity prices suggest. Investors continue to assume that because the Nasdaq remains elevated and AI-related assets command enormous valuations, capital remains readily available for virtually any project attached to a sufficiently exciting narrative.

But the first signs of tightening rarely appear in the S&P 500. They appear in credit markets. They appear in financing negotiations, like this one I was pointing out as far back as December of last year, claiming it was telegraphing a now-ripe meltdown in private credit. They appear in deals that would have sailed through six months earlier suddenly taking longer, getting repriced, downsized, or postponed altogether.

That is why the SoftBank situation caught my attention. Despite its sometimes questionable “vision” (like we saw prior to the WeWork IPO) we’re still talking about one of the largest, most sophisticated, and most politically connected investment organizations in the world...(READ THIS FULL ARTICLE HERE).

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