Blue Owl surges as management highlights 10x gain on SpaceX investment while “working down” software exposure
Blue Owl Capital shares are surging over 13% after the company reported Q1 results that signal its broader business is resilient in the face of some stress in private credit markets.
The key numbers:
Assets under management of $314.9 billion (estimate: $315.4 billion).
Fee-related earnings of $393.6 million (estimate: $383.5 million).
The firm signaled a shift in positioning, saying it is “working down” its exposure to software, a sector that has come under increasing scrutiny as investors reassess the impact of artificial intelligence on earnings durability and loan performance.
Executives also highlighted a roughly 10x return on an investment in SpaceX, where about half the position was sold, as an example of how upside from parts of its portfolio that investors haven’t paid much attention to can make up for some private credit gloom — and a justification for its overall investment approach.
On the conference call, co-CEO Marc Lipschultz said:
“Those are the ways we, even when we do have, and we will have some credit losses, how we can offset some of those losses. But the other thing I would just note on that is about our ecosystem. The reason we have that position is because we were one of the very earliest lenders to SpaceX And we made loans, we made a loan to the company and had the privilege of getting to know them very well, and then participating in ongoing conversations about other financing opportunities, and ultimately in this case, an equity investment.”
Ahead of earnings, analysts flagged expectations for a softer quarter driven by weaker fundraising and elevated redemptions, particularly in Blue Owl’s retail-focused private credit vehicles. Those funds have been a key growth engine but also a pressure point as investors seek exit liquidity that the asset manager has been unwilling to provide in full. Based on the reaction, much of that concern may have already been in the price.
Shares of the stock had slumped more than 40% year to date, with Blue Owl emerging as a proxy for broader concerns across the $1.8 trillion private credit market. Redemption requests have surged in recent months, at one point exceeding 40% in one fund and more than 20% in another, forcing the firm to gate withdrawals and sell assets to return capital.
On the latest call, management struck a confident tone, describing recent redemption activity as “more investor-led than advisor-led” while pointing to “continued strong support” from partners.
"We believe has been a headline driven, not fundamental driven redemption environment,” said Lipschultz.
Earlier this week, publicly traded private credit fund Ares Capital Corp marked down the value of loans to three software businesses by up to $0.18 in its Q1 report, which helped push net unrealized losses up to $357 million.
