Should you buy OPEN now, and is it a worthwhile investment?

**OpenAI's current valuation and financials suggest caution rather than excitement for new investors.** Here's why: 1. **Valuation Concerns**: - OpenAI's valuation has been estimated to reach $300 billion, a figure that seems inflated given its recent financial performance and market conditions. - The company's annualized revenue, although impressive at $12 billion, may not support such a high valuation when compared to its net income of -$85 million. OPEN Net Income, Revenue, Diluted EPS |code|stock code|Net Income (MRQ)|Total Revenue (MRQ)|Diluted EPS (MRQ)|Latest Report Period|Latest Report End Date|market_code| |---|---|---|---|---|---|---|---| |OPEN|OPEN.O|-8.5E7|1.153E9|-0.12|2025Q1|20250331|185| 2. **Financial Health Analysis**: - OpenAI's net income growth rate is positive at 22.02%, but this is overshadowed by a 49.08% decline in diluted EPS. - The company's 3-year CAGRs for net income, revenue, and diluted EPS are deeply negative, ranging from -42.47% to -46.17%, indicating a deteriorating trend in profitability and earnings per share. - OpenAI's P/E ratio is negative at -4.1, which is typical for companies with negative net income but raises questions about the company's profitability and the sustainability of its current valuation. OPEN Net Income Growth Rate, Revenue Growth Rate, Diluted EPS Growth Rate |code|stock code|stock name|Last Price|Last Change|Net Income Yoy Growth|Net Income|Report End Date|Fiscal Date|Report Period|Total Revenue Yoy Growth|Total Revenue|Diluted Eps Yoy Growth|Diluted EPS|market_code| |---|---|---|---|---|---|---|---|---|---|---|---|---|---|---| |OPEN|OPEN.O|Opendoor|2.07|0.97561|22.018348623853214|-8.5E7|20250331|20250331|2025Q1|-2.3708721422523285|1.153E9|25.000000000000007|-0.12|185| OPEN 3-Year Net Income CAGR, 3-Year Revenue CAGR, 3-Year Diluted EPS CAGR |code|stock code|stock name|Last Price|Last Change|Net Income Cum Compond Growth[20220630-20250331]|Total Revenue Cum Compond Growth[20220630-20250331]|Diluted Eps Cum Compond Growth[20220630-20250331]|market_code| |---|---|---|---|---|---|---|---|---| |OPEN|OPEN.O|Opendoor|2.07|0.97561|-46.17374863238452|-42.46559733338986|-49.08249227826844|185| OPEN P/E Ratio, P/B Ratio, P/S Ratio |code|stock code|stock name|Last Price|Last Change|P/E(TTM)[20250730]|P/S(TTM)[20250730]|Price to Book Ratio[20250730]|market_code| |---|---|---|---|---|---|---|---|---| |OPEN|OPEN.O|Opendoor|2.07|0.97561|-4.101345|0.294496|2.33999225344186|185| 3. **Market Sentiment and Future Prospects**: - Despite recent revenue growth, OpenAI's financials suggest that it is not yet profitable on a consistent basis, which could limit its appeal to investors seeking returns. - The company's heavy spending forecast of $8 billion for 2025 may indicate a need for additional capital, which could impact its short-term financial health. - OpenAI's ambitious Stargate infrastructure projects show a commitment to long-term growth, but these initiatives may require significant investment and time to yield returns. 4. **Investment Considerations**: - Given the current financials and valuation, new investors should be prepared for a potentially long wait for profitability and a return on investment. - The company's IPO plans and valuation estimates suggest that current shareholders may be looking to cash out their investment, which could lead to dilution for new investors. - The recent news about OpenAI's fundraising efforts and its ambitious growth plans may indicate a need for capital that could impact its stock price in the near term. In conclusion, while OpenAI's long-term vision and growth prospects are exciting, the current financials and valuation metrics do not strongly support a "buy" recommendation at this time. Investors should carefully consider their investment horizon, risk tolerance, and the potential for OpenAI to deliver on its ambitious growth plans before making a decision.