SB Energy's IPO is a negative case: no operating data centers, missed its 10GW-by-2025 target, H1 2026 operating loss even before $265M annual interest, Texas data center far behind schedule; debt-funded, and investors reject the $50B valuation.

Last month, SP Energy officially filed for an initial public offering (IPO) as it seeks to raise $5 billion at a valuation of up to $50 billion.

But there's a trick. SP Energy does not have a single operational data center, and it will likely take years before it generates any revenue from data centers.

In this video, we'll delve into SP Energy's IPO and what it tells us about the state of the AI bubble .

The history of SB Energy is a bit complicated, as SoftBank has actually created three companies under the name SB Energy over the years. They set up their first company, SP Energy, in 2011.

The company acquired some solar energy projects in Japan and Mongolia, but they abandoned all of these projects and closed the subsidiary after only two years in 2013. In 2015, they set up SP Energy India, which acquired some solar energy projects in that country.

In 2021, they shut down SP Energy India and sold all of its assets to an Indian company. The latest version was created in 2019 when SoftBank acquired five solar energy projects in the United States, three of them in Texas and two in California.

The name SP Energy has been revived once again for this new solar energy subsidiary.

These solar projects were supposed to eventually generate 1.7 gigawatts of electricity, but by 2019, construction work had not yet begun. It was nothing more than vast stretches of empty land in Texas and California.

By 2022, SP Energy announced that it had completed the construction of 1.3 gigawatts of solar power plants . So, the original five projects were approximately 75% complete. They also announced ambitious plans to develop 10 gigawatts of renewable energy and storage projects by the end of 2025.

In August 2026, SoftBank officially announced its intention to take SP Energy public as an independent company. Although SoftBank will retain a majority stake, the prospectus gives us a first look at the company's financial performance.

The first thing we learn from the bulletin is that they are significantly behind schedule for their solar farms. As of June 30, 2026, they have 2.2 GW of active solar power with another 2.5 GW under construction.

Remember that they previously targeted 10 gigawatts of renewable energy by the end of 2025. They have no other energy assets besides their solar farms.

Now, without further ado, let's look at the numbers. In the first half of 2026, SP Energy recorded revenues of $139 million and incurred a massive operating loss of $552 million.

However, the reported figures include many technical accounting aspects, which give a distorted picture of the underlying business performance.

SP Energy uses swap contracts to hedge against electricity prices, and records the gains in those contracts as revenue. Most of these gains are non-cash . These are simply changes in the estimated value of the contracts.

Excluding financial derivatives, they made $59 million in the first half of 2026 and incurred an operating loss of $632 million.

The biggest thing that stands out is the huge operating loss, but this is mostly due to $590 million in stock-based compensation. In 2024, senior SB Energy executives were given a conditional compensation package under which they would receive 10 % of the value the company distributes to its owners above a certain threshold.

Accounting rules require that this share be revalued every quarter, and any increase is recorded as a compensatory expense. In the first half of 2026, management raised its own estimate of the company's value from $30 million to $45 billion.

To clarify, this new $45 billion valuation is not based on any funding round. No one actually invested in SB Energy based on a $45 billion valuation. In light of the recent shift towards data centers and the upcoming IPO, management believes the company's shares will likely be worth more than they were when it was simply a private developer of solar farms.

All of this is mere speculation, and no cash payments have been made to management as a result of this discretionary valuation increase . The filings do not yet specify how many shares management will ultimately receive, but the figures suggest a stake worth approximately 8% of the company prior to the IPO.

If we exclude stock-based compensation, the operating loss improves to $42 million. These numbers are still appalling . Assets such as solar farms are built with borrowed money, and operating profits are what pay off the interest.

In 2025, SB Energy recorded interest expenses of $162 million on $2.2 billion in debt. By June 2026, the debt had reached $4 billion, which at current prices costs about $265 million annually.

The fact that they have an operating loss even before accounting for interest expenses indicates to me that they are extremely inefficient in running their solar farms.

In January 2026, SoftBank published a press release titled "OpenAI and the SoftBank Group enter into a partnership with SB Energy". It is somewhat strange to say that SoftBank is partnered with SB Energy, given that SB Energy is a wholly owned subsidiary of SoftBank.

While SB Energy started as a solar energy company , it is now shifting towards artificial intelligence data centers.

So far, SB Energy has announced two data center projects, both of which will be leased to OpenAI. The first project will be a 1.2 gigawatt complex in Millam County, Texas. The second will be a more ambitious 10-gigawatt complex in Picton, Ohio.

Construction of the Texas data center began in October 2025. It was originally supposed to be completed in October 2026, but it appears to be far behind schedule. On October 2nd, they released a video showing the progress of the work.

They claim there are 650 workers on site. They are digging some trenches and installing some steel and concrete reinforcing bars. They are not even close to being finished. I would be shocked if they started operations before the end of 2027.

In March 2026, SB Energy hosted a public relations event in Beckton, Ohio, at the site of the planned data center . The event was attended by U.S. Energy Secretary Chris Ray and U.S. Commerce Secretary Howard Lutenick.

It was broadcast on the official U.S. Department of Energy YouTube channel.

By this point, we expect that almost everything coming out of the current administration is a lie, but I still think it's important to highlight the most blatant lies told by Trump administration officials.

Let's listen to U.S. Commerce Secretary Howard Lutenick. This is not a debt-based project. This is not a project that will not be completed. This is a unique model in the world, the first of its kind.

This will produce reliable and affordable energy in the USA . Lutnick says this project will definitely be implemented because it does not carry debt. Building a 10-gigawatt data center complex would actually cost hundreds of billions of dollars.

SoftBank does not have hundreds of billions of dollars in cash at its disposal. This project will be financed mostly through debt. We know this because Nvidia is committed to providing $ 105 billion in loan guarantees to SB Energy.

Lutnik then boasts that the project will produce reliable and affordable energy. Even if electricity were reasonably priced, none of it would go to the local community. It will be consumed entirely by data centers.

This new data center will be powered primarily by natural gas. Even if they don't take electricity directly from the utility grid, they will buy huge quantities of natural gas from the market.

This will lead to an increase in the price of natural gas, which will raise electricity prices for everyone. The first phase of the Ohio data center complex is supposed to be operational in 2028, with full construction by 2032.

I treat these timelines with extreme caution, given that the Texas data center project appears to be significantly behind schedule .

OpenAI signed a binding agreement to lease the Texas and Ohio data centers upon completion for a total sum of $430 billion. The $430 billion will be paid out over 20 years, and payments will not begin until the data centers are completed.

OpenAI has incurred operating losses since its inception. Even before this latest deal with SB Energy, they already had spending commitments of hundreds of millions of dollars with no way to repay them.

The financial structure of the SB Energy deal is somewhat complex. In its IPO prospectus, SB Energy stated that total capital expenditure for its Ohio and Texas data center clusters would be $178 billion .

It should be noted that this only includes the cost of construction, the physical buildings themselves, new power lines , fiber optic lines, and other auxiliary infrastructure.

This does not include graphics processing units (GPUs), nor natural gas turbines. The natural gas turbines will be owned by a separate legal entity affiliated with SoftBank. We do not know how much these turbines will cost , nor where the money will come from.

SB Energy will lease the turbines from this separate entity.

OpenAI will lease data centers from SB Energy for $21.5 billion annually. This amount only covers what is called the " power shell". It does not include graphics processing units.

OpenAI is responsible for providing its own graphics processing units (GPUs) for placement within data centers. Graphics processing units will cost $350 billion. OpenAI does not have $350 billion.

They will receive a loan to purchase graphics processing units.

Assuming an interest rate of 8 %, OpenAI would have to pay $28 billion in annual interest payments. The entire project is a huge house of cards built on hundreds of billions of dollars of debt, which neither SoftBank nor OpenAI can afford.

All of this is supported by loan guarantees provided by Nvidia.

SB Energy initially planned to raise $5 billion at a valuation of $50 billion, but we are now in the final stages of the AI bubble and getting easy money has become a little harder .

In late September, International Financial Review spoke with some of the investment bankers involved in the IPO. Investors reject the $50 billion valuation. One banker explained: "The valuation gap is a major problem."

In addition to the initial public offering (IPO), SB Energy also plans to issue billions of dollars in bonds. Potential investors told the Financial Times that they expect the debt to be rated as " junk" (high risk) with a yield of around 10%. This portion of the debt is presumably