Blackstone's Market Low Ignites Optimism, But Risks Loom Large

What happened

Seeking Alpha recently touted Blackstone as a strong buy, citing a 52-week low valuation and robust fundamentals including AUM growth and rising earnings. The DeepValue master report corroborates this momentum, noting Q2-25 revenue of $3.7 billion and perpetual capital AUM increasing to $484.6 billion. Yet, the article glosses over significant headwinds such as PE fundraising softness and commercial real estate skepticism that the report flags as key risks. While the report acknowledges these as potentially cyclical, it stresses that adverse regulatory actions or market conditions could derail performance. Thus, Blackstone's scale offers resilience, but investor enthusiasm must be balanced with a critical eye on execution and external pressures.

Implication

The current valuation dip reflects market concerns that, if overblown, could lead to upside, but the reliance on fee and performance income means volatility is inherent. Growth in perpetual capital strategies provides a stable fee base, yet realization velocity and fundraising remain uncertain. Regulatory scrutiny in private credit could impact a core segment, and commercial real estate normalization is not guaranteed. Therefore, a balanced approach focusing on long-term platform strength while monitoring short-term headwinds is prudent. Overall, the investment case hinges on navigating mixed industry dynamics rather than a straightforward recovery narrative.

Thesis delta

The Seeking Alpha article reinforces the bullish aspects of the DeepValue BUY thesis, such as valuation and earnings growth. However, it underemphasizes the ongoing risks like PE fundraising and regulatory challenges that could temper the outlook. Thus, the thesis remains BUY but with heightened caution on cyclical recovery assumptions.