Blue Owl shares surge after private credit firm cites 10X gains from SpaceX loan

Blue Owl, the private credit firm recently under scrutiny for its ties to software companies, saw its shares rise by 10% on Thursday following the announcement of impressive profits linked to its investment in SpaceX. During a call discussing the firm's first-quarter earnings, an executive revealed, "We made about 10 times our money on that investment." The firm has already liquidated approximately half of its stake in SpaceX, which currently boasts a staggering valuation of $1.25 trillion. The executive did not specify who discussed the SpaceX investment, but the earnings call was moderated by Marc Lipschultz, co-CEO, and Alan Kirshenbaum, CFO. The gains realized from SpaceX, which is poised for what could become the largest IPO in history this year, are seen as a potential buffer against losses in other areas of Blue Owl's investment portfolio, particularly if software companies encounter defaults. The executive emphasized that while Blue Owl primarily focuses on loans, it also holds preferred and common shares, offering them an opportunity for equity gains and placing them in a unique position as hybrid credit-equity investors. Reflecting on their relationship with SpaceX, the executive shared, "We made a loan to the company and had the privilege of getting to know them very well, participating in ongoing discussions about further financing opportunities, which ultimately led to our equity investment." Management also noted that despite the declining loan-to-value ratios amid the software sector downturn, there remains a "tremendous amount of remaining cushion" before any losses are anticipated. This developing story will continue to unfold, and updates are expected soon.