Revenue went from $3.7B to $13.07B — roughly 3.5x.
Operating loss went from ~$8.8B to ~$20.9B — roughly 2.4x.
Doesn't seem like a domesday scenario.
Operating loss went from ~$8.8B to ~$20.9B — roughly 2.4x.
Doesn't seem like a domesday scenario.
Ceteris paribus, those figures imply a $45bn loss this year, $90bn loss next year and $110bn loss in 2028 before breakeven in 2029.
That's $250bn of losses to be financed from 2026 onwards. (They raised ~$120bn, $25bn up front and the rest based on milestones. So Another ~$125bn uncovered.) That only works if OpenAI stays a fundraising darling. So not a doomsday sceanario. But perilous, and dependent on short-term trends extending into long-term curves.
Of course you don’t use percentages when the magnitude of the numbers are so high.
Not really.
Fractions (7/2), ratios (3.5x) and percentages (+250%) are fundamentally mathematically identical.
There are a lot of problems with this back-of-the-envelope estimate, but I’m not sure the one I understand you presenting is one of them.
> Operating loss went from ~$8.8B to ~$20.9B — roughly 2.4x.
> Doesn't seem like a domesday scenario.
Those two lines are moving up and to the right, but are not parallel.
It all depends on where those two lines meet (the break-even point): too far in the future and the company will be dead anyway. Almost all companies will eventually be profitable; the problem is that the majority of them will need constant cash injections to keep the lights on.
Like the old aviation saying: even a brick will fly if it has enough thrust. doesn't make the brick a plane, though.
the brick has a lot of thrust but there is a airplane behind it, and it's moving on its own
But openai's chance of a moat on model quality is dropping as we go, not increasing
Both had a path to profitability in an environment of falling interest rates. OpenAI is going public in an environment of higher for longer interest rates. The discounting math is nowhere near as attractive for investors.
https://www.reuters.com/technology/openai-considers-drastic-...
Ads, maybe, but not only are they already walking back recent price hikes, the paying customers were hitting the brakes even on the original price.
Note that this data you see (their increased revenue) came from a period where they were onboarding customers who were competing to see who used the most tokens.
IOW, this is the best-case scenario for them - customers with no cap on token spend.
But... the caps from customers came in before they hiked prices. Then they hiked prices. That resulted in a short-term boost to revenue to compensate for the caps. Now they are talking about walking back those hikes. That means they are going to find an equilibrium lower than their best-case scenario.
I do wonder if this comparison is really meaningful. It looks like if they can grow infinitely, then at some point they should be profitable. However, that's already a somewhat sad story ("in the limit as x->inf, we'll actually _make_ money!"). And there are of course limitations. Anthropic, Google, open models etc are all real competitors, and it seems to me that there will only be one winner. If openAI is losing money faster than the others, then it may not survive long enough to reach that eventual profitability. And finally, the human population is limited. There isn't a true infinity that the pattern can extend to. If we've only reached 10% of the TAM that's fine, but if we're at like 70% (which personally I suspect is about right), then this looks bad.