Blue Owl Capital (NYSE:OWL) stock started the month under intense pressure as investors continued redeeming funds from its top private credit funds. OWL dropped to $9.08, down by nearly 30% from its highest point in August and by 63% from its all-time high.
Blue Owl’s Private Credit Challenges Continued in Q3
Blue Owl, one of the biggest companies in the private credit industry, remained under pressure in the third quarter as some of its customers continued redeeming their funds.
The company capped redemptions from its two of its private credit funds at 5% as fears about its exposure to the artificial intelligence industry kept requests above industry peers.
This decision came as investors in the Blue Owl Technology Income Corp asked to pull 39% of their shares in the third quarter. These redemptions were up from the 38.1% requested in the previous quarter.
The same challenges continued in its Blue Owl Credit Income Corp, which experienced requests of about 16.8% of its shares in the quarter. They requested 18.8% in the second quarter of this year as the woes continued.
Blue Owl has also faced challenges because of its exposure in the artificial intelligence industry, where it has extended billions of dollars in lending. For example, it is a major lender in Oracle’s (NYSE:ORCL) Project Jupiter, which has faced challenges in New Mexico. Oracle has issued a force majeure on the project.
Blue Owl is now shifting its strategy. While it plans to continue growing in its private credit business, the company is now boosting its focus on real assets. In the last earnings report, the company said that its real assets business makes up about 30% of its assets, with its AUM jumping by 25% on an annual basis.
On the positive side, the company’s revenue growth is expected to continue having some modest growth. Its annual revenue is expected to jump by 7.29% this year to $2.85 billion, followed by $3.13 billion next year.
Blue Owl Stock Freefall is Continuing
The weekly chart shows that OWL stock has been in a downward trend since January last year when it peaked at $24. It bottomed at $7.60 in March and then started rebounding, eventually peaking at $12.77.
Most recently, the stock has dropped for the last five consecutive weeks. It has slumped below the 78.6% Fibonacci Retracement level and the 50-week moving average.
At the same time, the stock’s downward trend has accelerated, with the Average Directional Index (ADX) remaining above 25. Therefore, the stock will likely continue falling, potentially to the key support level of $7.60, its lowest level in March.
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