Blue Owl stock has remained in a bear market, even as fears in the private credit sector continued waning. OWL dropped to $9.32 on Friday, its lowest level since July 30th this year, and 27.6% from its highest point in August. 

Blue Owl stock drops despite easing private credit concerns

OWL stock has retreated significantly in the past few weeks, erasing some of the gains it made in August this year. This retreat has happened even as the fears that rocked the private credit industry started waning. 

Some of the top companies, including Ares, BlackRock, BlackStone, Apollo, and Blue Owl experienced weaker redemption requests in the second quarter. While redemptions are continuing and inflows are falling, there are signs that the situation is improving.

Blue Owl has understood the challenge facing the industry and is now working to reshape its business model. One of the strategies is to refocus its business to other areas, which is seeing some modest success. 

For example, its focus on Real Assets is yielding success, with the business now constituting about 30% of its assets under management (AUM). AUM in this division jumped by 25%, while its revenue rose by 27%, helped by its net lease and digital infrastructure businesses. 

In all, despite its challenges, Blue Owl said that its revenue rose to $753 million in the second quarter from $703 million in the same period last year. Its trailing twelve month revenue was up by 14% to $2.9 billion. 

This revenue is mostly because of its management fees, which have continued rising. It was then offset by a sharp retreat in performance fees. The net income attributable to its shareholders dropped to $11.3 million in the quarter as its expenses rose. 

Concerns about its presence in the AI industry

One reason why Blue Owl shares have slumped this month is because of its presence in the artificial intelligence (AI) industry. It has become a major player in the sector by helping to fund some of the biggest projects. 

Blue Owl is funding about 80% of Meta Platform’s Hyperion campus in Louisiana. It is also a major funder of projects managed by CoreWeave. Most importantly, it has funded Project Jupiter, which has come under scrutiny this month. Oracle issued a force majeure, citing the challenges of getting power to the site.

In a recent statement, Blue Owl noted that the AI business accounts for about 6% of its assets under management. There are also concerns on the AI sector, with some experts urging for stricter regulations and an intentional slowdown.

Blue Owl stock price technical analysis

OWL stock chart | Source: TradingView

The daily chart shows that the OWL stock has slumped in the past few weeks, moving from a high of $12.7 on August 13 to the current $9.32. It has slumped below the key support level of $10.52, its highest level on June 1.

The stock has remained below the 50-day moving average, while the Average Directional Index (ADX) has moved to 31, a sign that the downward trend is gaining momentum. 

Therefore, the stock will likely continue falling as sellers target the key support level of $8.19, its lowest level on June 29. In the future, however, the company’s business will likely bounce back as investors buy the dip.

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