Blue Owl Capital's stock has entered a pronounced downturn, sliding to $9.32 on Friday—its lowest level since late July and a 27.6% decline from its August 13 high of $12.70. The pullback comes even as worries that had rattled the private credit sector begin to subside.
Private credit fears ease, but redemption pressures linger
Major private credit players, including Ares, BlackRock, Blackstone, Apollo, and Blue Owl, reported softer redemption requests in the second quarter. While outflows continue and inflows have slowed, there are signs the situation is stabilizing. Blue Owl has responded by reshaping its business model, with a notable push into real assets.
The real assets division now accounts for roughly 30% of Blue Owl's assets under management (AUM). That segment saw AUM climb 25% and revenue rise 27%, driven by net lease and digital infrastructure investments. Overall, the company reported second-quarter revenue of $753 million, up from $703 million a year earlier, and trailing twelve-month revenue grew 14% to $2.9 billion.
Management fees have been the primary revenue driver, but performance fees fell sharply. Net income attributable to shareholders dropped to $11.3 million in the quarter as expenses increased.
AI exposure under scrutiny
Blue Owl's involvement in artificial intelligence projects has become a focal point for investors. The firm is funding about 80% of Meta Platforms' Hyperion campus in Louisiana and is a major backer of CoreWeave-managed projects. Most notably, it has financed Project Jupiter, which recently faced a force majeure from Oracle due to power supply challenges.
Blue Owl has disclosed that AI-related investments represent about 6% of its AUM. However, broader concerns about the AI sector—including calls for stricter regulation and a deliberate slowdown—have added to the stock's downward pressure.
Technical outlook points to further downside
From a technical perspective, OWL has broken below the key support level of $10.52, which marked its June 1 high. The stock remains under its 50-day moving average, and the Average Directional Index (ADX) has risen to 31, indicating strengthening bearish momentum.
Analysts suggest the next target could be $8.19, the low from June 29. However, some market participants believe the company's fundamentals could eventually support a rebound as investors look for buying opportunities.
This article is for informational purposes only and does not constitute financial advice.
