Blue Owl Capital Inc. (OWL Quick QuoteOWL - Free Report) shares have lagged the industry over the past three months as investors recalibrated risk in private credit. Additionally, the stock’s short-term profile has not been helped by uneven earnings execution, with OWL beating the Zacks Consensus Estimate in only one of the last four quarters.

With sentiment still fragile, near-term debate has shifted to liquidity, deployment pacing, and how quickly fee growth can re-accelerate.
 

Image Source: Zacks Investment Research

OWL’s Underperformance Tied to Private Credit Sentiment

OWL’s recent underperformance has been closely linked to private credit apprehensions, particularly around liquidity in retail-facing structures. As investor confidence in private credit has cooled, valuation multiples and fundraising expectations have become more sensitive to headline risk.

That backdrop matters for Blue Owl as it relies on steady fundraising and consistent fee expansion. The most visible pressure point has been retail-oriented private credit, where non-traded business development companies (BDCs) saw slower flows and elevated redemption requests toward the end of 2025, with spillover continuing into 2026.

A key flashpoint came in February at Blue Owl Capital Corporation II (OBDC II). Withdrawals were restricted after redemption requests hit the 5% threshold, and assets were sold across affiliated funds to meet liquidity needs.

When semi-liquid private credit products come under stress, the impact can extend beyond one vehicle. The market tends to extrapolate liquidity concerns into broader skepticism, which can weigh on fundraising momentum, slow fee growth, and pressure valuation multiples in the near term.

Blue Owl’s Fee Ramp Depends on Deployment Timing

Another driver of near-term uncertainty is the timing of the embedded Fee-Related Earnings (FRE) ramp. OWL’s fee opportunity is tied to when capital is put to work across its strategies, and delays can shift earnings recognition even if the underlying fundraising base remains intact.

Management believes that $28.4 billion of assets not yet paying fees at the end of 2025 will generate more than $325 million of annual management fees, once deployed. This will support a modest FRE margin expansion.

If deployment is slower than expected or becomes clustered into the back half of the year, the fee ramp can be deferred and near-term upside compressed, even as longer-term economics remain in place.

Blue Owl’s Borrower Quality Worries in Tech and AI

Beyond liquidity optics, investors have also focused on borrower quality, especially for software and artificial intelligence-adjacent exposure in private credit. Caution has risen toward mid-sized technology companies, where earnings durability can be harder to assess and where competitive dynamics can shift quickly.

In portfolio terms, weaker fundamentals can raise downgrade risk. It can also shrink covenant cushions, leaving less room for operating slippage before terms tighten or outcomes deteriorate. If those stresses build, the risks can translate into a higher probability of restructurings or losses across the portfolio. That concern has been part of the broader sentiment headwind weighing on OWL.

OWL’s Expenses Stay High as Platform Investment Continues

While the revenue model is built around management fees, expense discipline remains an important swing factor for near-term earnings quality. Total expenses posted a 2021-2025 compound annual growth rate of 8.4%, reflecting a higher cost base over time. The key drivers were higher general, administrative and other expenses, along with compensation and benefit costs.

Looking ahead, expenses are expected to remain elevated due to steady investments in the franchise and higher revenue-related compensation costs. That combination can limit near-term operating leverage even if fee growth improves.

Blue Owl Offsets Risks With Permanent Capital Fees

The stabilizing counterweight is Blue Owl’s fee mix. About 85% of management fees were earned from Permanent Capital vehicles as of Dec. 31, 2025, supporting more predictable revenue through market cycles. That durability is reinforced by a diversified platform spanning Credit, Real Assets, and GP Strategic Capital, which helps balance fundraising and deployment opportunities across strategies.

This is why the setup can be viewed as two-speed: near-term private credit optics and liquidity headlines are a headwind, but a largely Permanent Capital fee base and a meaningful pool of assets awaiting deployment can support growth once timing normalizes. OWL currently carries a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
 

Blue Owl Capital Inc. Price and Consensus

Blue Owl Capital Inc. price-consensus-chart | Blue Owl Capital Inc. Quote

The broader alternative asset management group includes large peers like Apollo Global Management (APO Quick QuoteAPO - Free Report) , which emphasizes credit and retirement-oriented solutions, and Blackstone Inc. (BX Quick QuoteBX - Free Report) , which operates across major alternatives segments, including real estate and credit. 

Similar to Blue Owl, both Apollo Global and Blackstone are seeing a bearish investor stance because of private credit worries. Hence, Apollo Global is moving to value some private-credit holdings daily, a sign that transparency has become a competitive issue as skepticism grows. On the other hand, Blackstone announced a rise in its redemption cap from 5% to 7% after facing a jump in investor requests.