“Big Short” investor Michael Burry is issuing a fresh alarm about the future of OpenAI, believing that the ChatGPT creator is due to get crushed by Big Tech names.
In a new post on X, the famed short-seller says that even if OpenAI pulls off the largest IPO (initial public offering) in history, the money still won’t be enough to lift the company amid the intense competitive pressure.
“Even a $1 trillion OpenAI raising $60 billion would not be near enough, even though it would be the largest IPO raise in history by more than 2x. And will not change its Netscape fate.”
During the dot-com era, Netscape was the most dominant web browser until Microsoft decided to release the Internet Explorer for free with every Windows copy.
According to Burry, the market is likely mispricing OpenAI amid its massive user base to the tune of 800 million monthly active users. He compares OpenAI’s business model to Substack, where only a tiny fraction of its users pay.
“Over 90% of subscribers on Substack are free, so almost every estimate of Substack revenue you see is >10x too much.”
Turning to Palantir (PLTR), Burry says the firm is this era’s DiamondCluster, a publicly traded management and technology consulting firm that existed from 2000 to 2006. In July 2000, the stock price of DiamondCluster soared to as high as $98 during the peak of the dot-com bubble.
But the subsequent market crash severely impacted technology and consulting stocks and drove the share price of DiamondCluster to as low as $7.50 in April 2001, an over 92% decline in less than a year.
In 2010, PwC acquired DiamondCluster for $12.50 per share.
Last week, Burry said that he thinks PLTR should be trading at $30 or less. As of Friday’s close, Palantir is trading at $181.76.
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