Demand for privately held shꦯares of OpenAI dried up the moment Sam Altman was unexpectedly dismissed from the company ಌlast month.

While demand has started to return in the case of OpenAI shares, the episode is a reminder of the substantial volatility and risk that private-company investors incur—particularly employees of private firms who receive a substantial form of their compensation in 澳洲幸运5官方开奖结果体彩网:company stock.

On Nov. 17, bids to buy shares of Open AI, the developer of ChatGPT, totaled about $100 million on a trading platform run by Caplight that matches buyers and sellers of private equity. That day, OpenAI's board ousted Altman, considered the pioneer of 澳洲幸运5官方开奖结果体彩网:generative AI, as the firm's CEO. Almost immediately, buyers p♑ulled their bids, essentially eliminating all p𝔍rivate market demand for OpenAI's shares, said Javier Avalos, Caplight's co-founder and CEO.

Altman's departure proved short-lived. Five days later, a reconstituted OpenAI board 澳洲幸运5官方开奖结果体彩网:rehired him. But not before his planned move to Microsoft (MSFT), a key OpenAI investor, had pushed the technology giant's publicly traded shares to an all-time high.

Upon his return to OpenAI, private market demand for the firm's shares also reappeared, though not quite to the same degree. In an interview on Nov. 27, Avalos said about a third of the OpenAI purchase bids that vanished after Altman's firing had returned to Caplight's platform.

Private-Market Speculation

Nowhere does the spotlight of private-company investment shine brighter thes🐎e days than on🌞 tech firms scrambling to make their name in the exploding world of AI.

"The vast majority of buy-side volume is from generative AI," Avalos said of current demand reflected on Caplight's platform.

That demand comes largely from 澳洲幸运5官方开奖结果体彩网:speculative buyers looking to get a stake in burgeoning private firms they expect eventually will issue an 澳洲幸运5官方开奖结果体彩网:initial public offering. Ideally for those buyers, an IPO would offer a highly profitable way to exit their ownership stake.

That speculation, though, can make private market shares far more volatile than their publicly traded counterparts, which benefit from more liquidity and price transparency. The ൲value of private company shares, particularly at startups, also may rest more squarely on key individuals, such as Altman.✤

Stock as Compensation for Employees

Those realities hit even closer to home for private-company employees accept♔ing stock as a substa𒅌ntial portion of their compensation.

David Amman, a financial adviser and Certified Financial Planner with Edward Jones in Redwood City, Calif., said this month's OpenAI saga offers lessons for all workers with 澳洲幸运5官方开奖结果体彩网:stock-based compensation.

"We've seen this lesson repeated during the early days of the internet, with renewable energy companies, or in biotech," Amman said.

Amman said non-market based events can dramatically affect individual companies and their underlying stock. When possible, he advises all inv♊estors to diversify their assets—including stock-compensation plans.

"A good rule of thumb is to ensure that no more than 5% of your investable net worth is invested in any single stock," he said, "especially the companies you work for."

That may prove difficult for some private-company workers who can't easily cash out. But if they can yet don't, workers should make sure they're retaining company stock for the right reasons—for instance, not overly valuing potential tax benefits while dismissing volatility risks.

"Especially with smaller companies, fluctuations in stock price may significantly outweigh the potential tax savings of buying and holding company stock," Amman said.