Wall Street Banks Begin Covering Private Firms Amid Secondary Share Sales Boom

JPMorgan Chase & Co. has initiated coverage of private company OpenAI Inc., with Citigroup Inc. following suit a week later. This trend is expected to continue, as investment banks seek to arrange secondary share sales for hot unicorns and gain access to startup employees who want to divest their stakes. JPMorgan's research provides a thought process for investors, who may not be familiar with fair prices for private companies. The bank's analysts have called OpenAI's 2030 sales projection "ambitious" and emphasized the importance of scale, rather than revenue projections.

Wall Street banks are increasingly covering private companies, with JPMorgan Chase & Co. and Citigroup Inc. leading the way. This trend is driven by investment banks' desire to arrange secondary share sales for hot unicorns and gain access to startup employees looking to divest their stakes [1].

JPMorgan Chase & Co. kicked off the trend by covering OpenAI Inc., a private company valued at $500 billion in talks for a secondary sale. Citigroup Inc. followed suit a week later, announcing its intention to focus on roughly 100 large private companies, predominantly in the tech sector [1].

Investment banks are keen to tap into this lucrative business. They stand to earn brokerage fees and can offer services to newly minted billionaires who cash out their stakes. However, determining fair prices for these private companies can be challenging. Even savvy money managers may struggle to assess the value of companies like OpenAI, given the volatility in their reported valuations [1].

JPMorgan's research on OpenAI provides a thought process for investors. The bank's analysts have called OpenAI's 2030 sales projection "ambitious," noting that the company would need to capture about a quarter of the total market share to achieve this target. Instead, they emphasize the importance of scale, comparing OpenAI's potential growth to that of Meta Platforms Inc., which achieved $100 billion in revenue in 17 years [1].

This trend presents an opportunity for analysts to showcase their worth. Instead of focusing on quarterly earnings, they will need to delve into the ecosystems of these billion-dollar tech companies to provide relevant insights. However, it also means more work for analysts, as they must now understand complex, often privately held companies [1].

References:
[1] https://www.bloomberg.com/opinion/articles/2025-08-13/jpmorgan-s-openai-coverage-is-just-the-start
[2] https://www.marketbeat.com/instant-alerts/filing-savvy-advisors-inc-increases-stock-position-in-jpmorgan-chase-co-nysejpm-2025-08-13/