Warning: Creditors Reject OpenAI as Collateral

Chart of the Day — Huge performance gap in the tech sector
Trade of the Day — NEAR rejected at resistance
Alpha Leaks — Morpho's major DeFi raise
News Roundup — OpenAI valuation doubts; Anthropic and SpaceX latest

Tech’s Huge Performance Gap

According to Bank of America data, there is now a huge performance gap within tech stocks, with a 120 percentage point performance gap between the top 20% of stocks and the bottom 20% of stocks, taken over the last three months.

The biggest gap on record was in February 2000, where the difference hit 135 percentage points, but note that what also stands out now is the speed with which the gap has opened up. Over the last year, the difference has quadrupled, which is an unprecedented pace of acceleration.

NEAR Hitting Resistance

NEAR broke down from a huge double top pattern and is now meeting resistance at the neckline, having wicked back above a couple of times but failed to follow through. We’ve identified this as a short opportunity, and it’s an active trade right now.

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SoftBank Refused Loan on OpenAI Collateral

How much is OpenAI really worth? We’ll find out soon, as the AI firm this week filed confidentially for its long-expected IPO, and its last funding round, in March, placed it at an $852 billion valuation.

However, it appears that financial institutions are not all buying that number, as SoftBank has been refused a $6 billion margin loan that was to use its $60 billion OpenAI stake as collateral, and this comes after SoftBank had already scaled down from an initial $10 billion loan target.

Now to be fair, there are many unknowns around this development, as margin loan negotiations have multiple variables, but still, it adds fuel to the case that the numbers around the upcoming big three IPOS–OpenAI, Anthropic, and SpaceX–are over-inflated.

Also, keep in mind here that SoftBank’s OpenAI investment was itself partly funded with a $20 billion margin loan that used the firm’s ARM shares as collateral, so a further loan would create borrowing on top of borrowing, all at extended collateral valuations.

Anthropic Launches New Model to Heavy Criticism

OpenAI competitor Anthropic has launched its new Claude model, called Fable 5, which it describes as “Mythos-class”, while giving Mythos 5 a limited release only to “a small group of cyber defenders and critical infrastructure providers”.

According to Anthropic, Fable 5 and Mythos 5 are the same underlying model, but the Fable version has additional restrictions, with Anthropic explaining, “without safeguards, Fable 5’s capabilities in areas like cybersecurity could be misused to cause serious damage”.

However, the response from users has been far from positive, with critics noting that the guardrails mean Fable 5 cannot be used for anything related to biology and life science (since this relates to bioweapons), and that Machine Learning is also a restricted area (since this relates to recursive development).

Note also that paid plans only include Fable 5 until June 22nd, after which it is scheduled to move to a usage credits model (unless there is capacity to extend paid plan inclusion), so it seems that AI is shifting into an era where access becomes increasingly uneven.

Leveraged SpaceX ETFs Launching on IPO Day

How frothy is the SpaceX IPO? Well, not only is it hitting the market at a $1.8 trillion valuation, but it’s also 4x oversubscribed, and just to spice the occasion up even further, there is a 2x SpaceX ETF planning to launch on the same day as the IPO, June 12th, along with a 3x SpaceX ETF in Europe.

The former of those is managed by ProShares and it’s called the Ultra SpaceX ETF, and the latter is from LeverageShares, but to be clear, we’re not highlighting these as recommendations, but as a warning that volatility around SpaceX will be enormous.

As a general rule, it’s common for IPOs to initially run up hard as FOMO takes over, before (sometimes rapidly) draining back down again, after which patient buyers can step in. To illustrate this point, the chart above, posted by Thierry Borgeat, shows that the median first-year drawdown on tech IPOs over the last decade is 54%.

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