AI Summary
5 min readOpenAI Burned $21 Billion Last Year — and the Costs Are Still Climbing
OpenAI spent $34 billion to generate $13.07 billion in revenue last year, producing a net loss from operations of roughly $21 billion. The numbers come from a leaked financial document independently verified by the Financial Times — obtained by journalist Ed Zitron, who broke the story. The company has filed to go public later this year, which raises an obvious question for potential investors: is this kind of cash incineration sustainable, or is the business model fundamentally broken?
The Real Cost Structure Is Worse Than It Looks
The headline net loss of $38.5 billion includes what Zitron calls "GAP voodoo" — accounting charges tied to valuation adjustments and investor rights that inflate the number. But stripping those out does not improve the picture. The operational loss of $21 billion is the figure Zitron insists on focusing on. "You spent $34 billion to make $13.07 billion," he says. "You didn't just lose $8 billion. Stop."
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What you'll learn
- 1 (02:56) **OpenAI’s Leaked Financials: The Headline Numbers** - Ed Zitron reveals the top-line figures from the leaked document: $13.07B in revenue, $34B in spending, and a $21B operating loss.
- 2 (05:28) **The SoftBank Red Flag & Revenue Quality** - A single partner, SoftBank, contributed $867M (6.6% of revenue) for a product called "Crystal Intelligence" that was barely launched.
- 3 (06:21) **Unpacking the “$8 Billion Loss” Spin** - Zitron dismisses the narrative that the real net loss is only $8B after adjustments, calling it “wank.”
- 4 (09:36) **Sales & Marketing: The Most Alarming Cost** - Marketing spend jumped 418% in one year to $5.73B, consuming 44% of total revenue.
- 5 (10:49) **SpaceX vs. OpenAI: Different Kinds of Money Incinerators** - Contrasting the two high-profile IPOs: SpaceX has Starlink and rockets as functioning businesses; OpenAI has only ChatGPT and an API.
- 6 (12:20) **The IPO Roadshow Nightmare** - Sam Altman lacks Elon Musk’s proven ability to sell a fantastical story to markets.
- 7 (14:55) **The $34B to $13B Math – No Way Around It** - The fundamental equation cannot be ignored: spending $34B to generate $13B (with $867M of that from SoftBank) is not a stable business.
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Guests on this episode
Show Notes
Ed Elson is joined by Ed Zitron to discuss OpenAI’s leaked financials and how much money they are actually losing. Then, Nicolas Owens joins the show to unpack why he thinks SpaceX is overvalued. Finally, Ed explains why he thinks the markets have entered Crazy Town.
Ed Zitron is the author of the Where’s Your Ed At Newsletter, and the Better Offline Podcast. Nicolas Owens is an equity analyst for Morningstar.
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