Is it Time to Sell Blackstone Stock Amid Rising Private Credit Woes?

As rising concerns about the private credit market, fund outflows and macroeconomic pressures affect alternative asset managers, shares of Blackstone Inc. BX have lost 28.2% in the past three months compared with the industry’s 21.4% decline. 

Investor sentiment weakened after the firm’s flagship $82-billion private credit fund (BCRED) saw unusually high redemption requests, with investors withdrawing billions of dollars and redemption levels exceeding typical quarterly limits, raising worries about liquidity and the stability of private credit funds. Earlier this month, Blackstone announced a rise in its redemption cap from 5% to 7%.

Primarily, the withdrawals were triggered by the recent high-profile corporate bankruptcies and credit stress in sectors such as auto suppliers and subprime lenders, which raised concerns about potential loan defaults within private credit portfolios. Also, investors became worried about exposure to software and technology borrowers, which face uncertainty due to artificial intelligence (AI)-led disruption and slowing growth.

Higher bond yields and interest-rate uncertainty have also reduced the attractiveness of leveraged buyouts and real estate investments, two key areas for Blackstone, contributing to the sharp decline in the stock.

The private credit market headwinds have been weighing on other alternative asset managers, such as BlackRock BLK, Apollo Global APO and Blue Owl Capital Inc. OWL as well. Shares of these companies have also faced bearish investor sentiments, with all trading in the red. In the past three months, shares of BlackRock, Apollo Global and Blue Owl Capital have lost 13.1%, 28.1% and 39.1%, respectively.

3-Month Price Performance

Last month, Blue Owl Capital moved to restrict investor withdrawals from one of its retail-focused funds. Apollo Global’s CEO, Marc Rowan, warned that a shakeout is coming for private credit firms as the industry faces concerns about rising defaults on loans to software companies. BlackRock has restricted withdrawals from its private credit fund, HPS Corporate Lending Fund, following a jump in redemption requests.

Against the tough operating backdrop for alternative asset managers, investors must consider whether it is worth holding on to the stock or better to exit. But, before making any investment decision, it is important to examine BX’s fundamentals and growth prospects to assess whether the stock still offers meaningful upside potential.

Blackstone’s Fundamental Strength

Robust Assets Under Management (AUM) Balance: Blackstone has a solid AUM balance. Its total AUM and fee-earning AUM have seen compound annual growth rates (CAGR) of 15.6% and 14.4%, respectively, over the last five years (2020-2025). At the end of 2025, the total AUM balance reached a record $1.27 trillion.

Blackstone’s AUM growth has been driven by continued solid capital inflows, the company’s strategic investments in high-growth infrastructure and technology sectors, and a broad fundraising momentum. The company’s investments in secular growth areas like digital infrastructure, AI infrastructure, energy transition and life sciences are major tailwinds. 

While Blackstone’s expansion into private wealth channels and insurance platforms has helped in diversifying its revenue sources, new products like perpetual vehicles allow tapping demand from different kinds of investors.

The company’s diversified product base, solid revenue mix and superior position in the alternative investments space are expected to continue supporting AUM growth.

Strong Fundraising Ability: Despite a challenging fundraising environment for asset managers, Blackstone has been raising money. Fundraising for the global private equity and real estate funds resulted in Blackstone’s ‘dry powder’ or the available capital of $198.3 billion as of Dec. 31, 2025.

In 2024 and 2025, the company deployed $133.9 billion and $138.2 billion of capital, respectively. With substantial investable capital, Blackstone is well-positioned to take advantage of market dislocations. Accelerating growth in India and Japan offers attractive opportunities, supporting a strategic deployment of capital.

In April 2025, Wellington, Vanguard and Blackstone announced the formation of an alliance to develop simplified multi-asset investment solutions combining public and private markets. Aiming to broaden investor access to institutional-quality portfolios, the collaboration leverages each firm’s strengths to address long-term diversification and return challenges in wealth and asset management.

Blackstone’s Valuation Analysis

On a valuation basis, shares of Blackstone appear to be trading at a premium relative to the industry.

The company’s forward 12-month price/earnings (P/E) ratio of 16.58 is above the industry average of 9.76.

P/E (F12M) Ratio

How to Approach Blackstone Stock Now?

A premium valuation compared with the industry makes us apprehensive about the company’s prospects. Tighter credit markets of late, relatively high interest rates, slower deal activity in private equity and real estate, reduced realizations and concerns about exit opportunities are expected to hamper Blackstone’s near-term prospects.

Rather than immediate credit losses, the concerns in the private credit market will continue to weigh on Blackstone for some time now, mainly through investor sentiment, potential redemptions and slower fundraising. Caution among retail and wealth-channel investors toward semi-liquid credit vehicles is likely to lead to continued outflows or slower inflows, which may slightly pressure AUM and fee-related earnings in the near term.

If we look at Blackstone’s estimate revisions, it is clear that analysts are not optimistic regarding the company’s earnings growth prospects. While the company’s earnings estimates for 2026 and 2027 reflect year-over-year growth rates of 14% and 26.8%, respectively, estimates for both years have been revised lower over the past 30 days.

Earnings Estimate Revision

Nevertheless, since Blackstone manages assets across private equity, real estate, credit, infrastructure and hedge fund solutions, the diversification enables it to generate multiple revenue streams, including management and performance fees. Being the largest alternative asset manager in the United States, its strong brand and deep relationships with institutional investors are expected to continue to drive fund inflows, supporting growth in AUM and fee-related earnings in the long run.

Thus, while valuation-aware and more conservative investors should stay away from the BX stock at present, those who already own the stock can hold onto it as the company is less likely to disappoint in the long run. Investors should closely monitor how private credit-related risks evolve and assess Blackstone’s strategic response before making fresh investment decisions.

Currently, Blackstone carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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