Shares of Blue Owl Capital rose sharply on Thursday after the firm revealed it had sold roughly half of its stake in SpaceX at a valuation of $1.25 trillion, underscoring a significant return on its early investment.

The stock climbed more than 10% during the session, as investors responded positively to the update alongside better-than-expected quarterly results and steady growth in assets under management.

SpaceX stake delivers outsized returns

Co-Chief Executive Officer Marc Lipschultz said the firm had generated approximately 10 times its initial investment in SpaceX, according to comments made during the earnings call.

Blue Owl was among the early lenders to SpaceX before eventually acquiring equity stakes in 2021 across two classes of shares.

The partial exit highlights the firm’s ability to capitalize on high-growth private market opportunities.

SpaceX is reportedly considering a public listing later this year at a valuation that could reach $1.75 trillion, potentially raising around $75 billion in what would be the largest initial public offering to date.

If realized, the listing could also propel founder Elon Musk to become the world’s first trillionaire.

Strong earnings and fundraising momentum

Blue Owl’s first-quarter results further supported the stock’s gains.

The firm reported revenue of $753.8 million, exceeding analyst expectations of $687.23 million.

Assets under management rose to $314.9 billion at the end of the quarter, marking a 15% increase from a year earlier.

Distributable earnings climbed 11% to $292.5 million, above forecasts of $285.6 million, while fee-related earnings rose 14% year-on-year to $393.6 million.

“Performance remains strong across Credit, Real Assets, and GP Strategic Capital, and we believe that the current market landscape tends to favor firms with patient capital and longer duration, such as Blue Owl,” said co-CEOs Doug Ostrover and Marc Lipschultz.

The company also reported total fundraising of $9 billion during the quarter, up from $6.7 billion a year earlier.

Growth was driven by real estate, infrastructure, and other segments, while fundraising in its core credit business remained relatively flat at $4.1 billion.

Private credit pressures and portfolio shifts

Despite the strong headline figures, challenges remain within Blue Owl’s private credit business.

Growth in its flagship direct-lending unit has slowed amid investor concerns over exposure to software companies and the broader impact of artificial intelligence on the sector.

The firm experienced a wave of redemption requests in the first quarter, primarily from individual investors.

Lipschultz said the withdrawals reflected sentiment rather than fundamentals.

He noted the company is actively reducing its exposure to software investments. “Working down our exposure to software given the level of uncertainty,” he said, adding that while some loans have been marked down, they still maintain a margin of safety.

He also emphasized that the redemption activity was largely driven by headlines rather than underlying performance, stating it showed “continued strong support from our partners and what we believe has been a headline-driven, not fundamental-driven redemption environment.”

Performance in the direct-lending business reflected these pressures, with gross returns slipping to negative 0.44% in the first quarter.

Trailing 12-month returns declined to 8.5%, down from 12.4% in the previous quarter and 13.3% a year earlier.

As Blue Owl navigates shifting market dynamics, the firm reiterated its commitment to maintaining its fee-related earnings margin target, with potential measures including tighter expense management.

The combination of strong investment gains, particularly from SpaceX, and steady operational performance appears to have reassured investors, even as risks persist in parts of its core lending business.

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