How to Invest in Perplexity.AI: A Comprehensive Guide

Investing in emerging technologies, especially in the field of artificial intelligence, can be an exciting venture for many investors. Perplexity.AI, as a new entrant in the AI industry, has garnered attention for its unique approach to enhancing how we interact with information and data. This article will guide you through the process of investing in Perplexity.AI, covering the necessary steps, strategic considerations, and potential risks and rewards.

What is Perplexity.AI?

Perplexity.AI is an innovative tool designed to enhance the way we search for and interact with information online. It's built to provide more contextual and accurate responses to queries by understanding the nuances of natural language. Whether you're a researcher, student, or just curious about the world, knowing how to effectively use Perplexity.AI can significantly improve your information-gathering skills. This article will guide you through the basics of using Perplexity.AI, including how to formulate questions, interpret answers, and utilize the tool's unique features for a better learning experience.

Is Perplexity Publicly Traded?

Perplexity is not yet available on public stock exchanges. This burgeoning company was established in August 2022 by founders Andy Konwinski, Denis Yarats, Johnny Ho, and Aravind Srinivas. Srinivas, who previously contributed to OpenAI—widely regarded as a frontrunner in generative AI—now leads Perplexity as its CEO. Although Perplexity has successfully completed three rounds of funding, transitioning from a startup to a publicly traded entity often spans several years, even for the most promising ventures.

Will Perplexity Perform IPO?

There have been no confirmed reports about Perplexity's intentions to go public. However, according to several media outlets, the company is poised to secure additional funding in a round that may elevate its valuation to $1 billion, categorizing it as a unicorn—a term designated for startups valued at $1 billion or more.

Founded in 2022, Perplexity might require several more years before considering an IPO, assuming its trajectory remains positive. Historically, apart from the dot-com boom, when companies rapidly went public to capitalize on the immense investor enthusiasm for internet stocks, most successful tech IPOs have been years in the making.

For instance, Alphabet (GOOG 0.24%), initially Google, launched in 1998 but didn't go public until 2004. Similarly, Meta Platforms (META 0.6%), originally Facebook, was founded in 2004 but didn’t have its IPO until 2012. If Perplexity mirrors these tech giants, its earliest public offering would likely not occur before 2028.

Following the dot-com bubble burst, investors have become more circumspect, preferring to invest in IPOs only after a company has demonstrated substantial growth and profitability and provided evidence that its business model, especially in a sector as dynamic as AI, is sustainable. Given these considerations, it might take a few additional years for Perplexity to present compelling evidence to meet these investor expectations.

How to Buy Perplexity Stock?

Since Perplexity is not publicly traded, direct stock purchases are not possible. Nevertheless, there are alternative routes for investors seeking exposure. One could consider investing via a venture capital firm that holds stakes in Perplexity, or by purchasing shares through employee stock purchase programs. However, these options are generally reserved for accredited investors who possess a significant net worth.

A more accessible approach might be to invest in companies that own shares in Perplexity. This indirect investment method allows broader participation and can be a practical option for those looking to get involved with Perplexity’s potential growth.

Step 1. Open a brokerage account

To invest in a company that holds shares in Perplexity, you'll need to open a brokerage account that enables you to buy and sell stocks. There are numerous options available for setting up a brokerage account, such as Charles Schwab, Fidelity, Robinhood, and E-Trade, among others. Each platform offers different features and benefits, so it's wise to compare them to find one that meets your investment needs.

Step 2. Do company research

Next, it's crucial to conduct thorough research to fully understand your investment, including its strengths, weaknesses, and associated risks. It’s advisable to articulate your investment thesis clearly, outlining the reasons for your investment and the conditions that might prompt you to revise your strategy or consider purchasing the stock. Here, we recommend doing stock research on Intellectia.AI, a Perplexity-like platform that focuses on stock research.

Step 3. Place an order

When placing a market order, you pay the current market price, which is determined by the bid-ask spread. On the other hand, a limit order allows you to set the maximum price you're willing to pay for a share, affording you greater control over your purchase price. Similarly, when selling a stock, a limit order lets you specify the minimum price you are willing to accept.

Should I Invest in Perplexity?

At just 2-year old, Perplexity is in the early stages of generating revenue. As of January 2024, the company was unprofitable, with annual revenues falling below $10 million. It is common for tech companies to prioritize growth and market share expansion in their initial stages before shifting their focus to profitability. Perplexity appears to be adopting this strategic approach.

Perplexity is aiming to disrupt Google in the search engine market, targeting a vast potential market. The company is likely to continue its investment in product enhancement, securing the necessary computing infrastructure for business expansion, and marketing efforts to broaden its customer base and foster positive word-of-mouth. Currently, achieving profitability is not an immediate priority for Perplexity.