OpenAI’s IPO Dream Faces a Triple Threat: Slowing Growth, Price Wars—and Musk

By any measure, OpenAI has defined the generative AI era. But as it inches toward a potential IPO, the company now faces a convergence of risks that could significantly complicate its path to public markets: missed internal targets, intensifying global competition, and a high-stakes lawsuit that could reshape its very structure.

1- Cracks in the Growth Story

Recent report from The Wall Street Journal indicates OpenAI has fallen short of its own revenue and user growth projections—an uncomfortable signal at a time when investor expectations are extraordinarily high.

For a company commanding one of the largest private valuations in tech, any sign of slowing momentum raises questions about sustainability. Public markets are far less forgiving than private capital when growth disappoints.

2- DeepSeek and the Economics Shock

At the same time, competition is no longer theoretical. DeepSeek has emerged as a disruptive force—one that is not just competing on performance, but radically undercutting pricing.

Its latest models are up to 97% cheaper than OpenAI’s equivalents. With token pricing measured in fractions of a cent, DeepSeek is redefining the cost structure of AI usage. In practical terms, enterprise deployments that cost millions on OpenAI infrastructure could be delivered at a fraction of the price.

Potentially, backed by potential investments from Tencent and Alibaba at valuations exceeding $20 billion, DeepSeek is not just cheaper—it is scaling fast and gaining global traction.

The implication is stark: AI models are rapidly becoming commoditized. And in a commodity market, margins shrink.

3- The Legal Wildcard: Musk v. OpenAI

Hovering over all of this is a courtroom battle that could have existential consequences. Elon Musk—a co-founder of OpenAI—has sued the company, arguing it betrayed its original nonprofit mission by transforming into a profit-driven enterprise.

The case, now underway in California, is not just symbolic. Musk is seeking remedies that go far beyond financial damages:

• forcing OpenAI to return to nonprofit status
• stripping leadership, including Sam Altman, of control or equity
• unwinding parts of its commercial structure, including ties with Microsoft

4- If Musk Wins: IPO in Jeopardy

A Musk victory would strike at the heart of OpenAI’s investment thesis. First, forcing a return to nonprofit governance would make a traditional IPO nearly impossible. Public shareholders expect profit distribution, governance clarity, and capital returns—all incompatible with a nonprofit structure.

Second, leadership disruption—especially the removal of Altman—would inject instability at the worst possible moment. IPO investors prioritize continuity; a governance crisis is a red flag.

Third, unwinding commercial agreements (notably with Microsoft) could destabilize OpenAI’s revenue engine and infrastructure backbone.

Finally, even the process of litigation itself introduces uncertainty. As analysts note, the trial could “cost OpenAI billions” and complicate fundraising efforts already underway. Paradoxically, OpenAI does not need to lose for the lawsuit to be damaging.

The trial is exposing internal communications, governance disputes, and strategic tensions at the highest levels of the company. These revelations risk undermining investor confidence—particularly in a market already questioning valuations across the AI sector. In other words, the lawsuit adds reputational and operational risk precisely when OpenAI needs maximum credibility.

5- A Perfect Storm Before Going Public

Put together, OpenAI now faces a rare convergence of pressures:

• Operational risk: missed revenue and user targets
• Competitive risk: DeepSeek’s dramatically lower pricing and rapid adoption
• Structural risk: a lawsuit that could alter its corporate form

Any one of these would complicate an IPO. Combined, they create a far more difficult environment.

*Bottom line: OpenAI still leads in brand, ecosystem, and technological capability. But leadership alone may not be enough. With AI costs collapsing, competitors scaling globally, and a founding member challenging its very structure in court, the company’s path to IPO is no longer just ambitious—it is uncertain. In the new AI landscape, the biggest risk to OpenAI may not be whether it can build the best models. It’s whether it can remain the company investors thought they were buying into in the first place.