Episode summary
Anthropic IPO: Why I’m Not Rushing to Buy at $1 Trillion
Summary
The host argues that Anthropic’s planned IPO looks less attractive as the valuation keeps sliding from a rumored $2 trillion toward $1 trillion. He says the lower price may tempt brokers to pitch it as a bargain, but he would not rush to buy it and thinks investors may get another chance near the IPO price after it starts trading.
His biggest concern is the structure of the deal. He says the S-1 appears to let insiders sell quickly, which he dislikes because he prefers lockups and wants IPOs to fund growth rather than serve as an exit for early holders. He also points to heavy debt and contractual commitments tied to data centers and compute, which he says make the business capital intensive and dependent on massive upfront spending.
The host also questions Anthropic’s economics and moat. He says the company is still very unprofitable, and that revenue growth is being driven by lower token pricing rather than stronger pricing power. In his view, that raises doubt about durable competitive advantage and could leave the stock vulnerable unless Anthropic’s products become indispensable.
Key takeaways
- The host thinks Anthropic’s valuation reset from $2 trillion toward $1 trillion may still not make the IPO compelling enough to buy quickly.
- He says the S-1’s quick insider selling rights are a red flag because he prefers lockups that keep insiders from using the IPO as an exit.
- He says Anthropic’s $1.3 trillion in debt and other compute commitments make the business highly dependent on massive fixed spending.
- The host argues that Anthropic’s revenue is growing partly because it is charging less per token, which weakens the case for pricing power.
- He believes investors may get opportunities to buy the stock at or near the IPO price within months if the market overhypes the deal.
Notable quotes
“the plan allows for insiders to sell their shares very, very quickly. That concerns me”
“I don't want a company to go public and immediately use it as an exit event for insiders”
“Anthropic now has $1.3 trillion in debt and other contractual commitments for all these data centers and compute”
“The other thing that concerns me the most is, and this is something that really concerns me a lot here, the business model, the competitive advantage”
“My personal opinion is you'll probably get opportunities to buy it at or close to the IPO price within months of it going public”
How the episode opens
Good morning. This is Dylan Giovine with Behind the Market. Happy Tuesday.
Today is Tuesday, the 10th of November. What a great day it is to be alive. You know, a lot of folks asked how my son did in his game.
They were in a championship basketball game this weekend. They lost. He played great.
His team lost. And the coolest thing about it was, you know, you win some, you lose some. You know, but the coolest thing about it was he really was like, I want to do better next year.
I don't like this feeling of losing. So really want to do better and that's the kind of thing we want. It's kind of that grit, that bounce back mechanism.
When life hits you in the face, you just get back up and go after it. I was very, very proud of him. So I want to say to him how proud I am of him.
He should be very proud of himself, the way he played and the way he showed up for his team. Anyway, today I'd like to talk about Anthropic. You know, Anthropic is going public this month.
That is the plan. It is Anthropic and ChatGPT maker OpenAI. Anthropic makes Claude.
OpenAI makes ChatGPT. Those are the two independent labs that most people interact with, even though you're interacting a lot now these days with Google's Gemini. So those are the two independent labs that most folks interact with.
And Anthropic's going public. And here's what's interesting. Anthropic was expected to go public at a $2 trillion valuation.
But this the shakeout that we've had in the market post election, even pre-election really, it was brought down to 1 1/2 trillion. Then people were talking about 1.25 trillion. And now people are starting to talk about 1 trillion or lowering the amount that they are trying to raise in their IPO.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- anthropic ipo
- insider lockups
- data center and compute debt
- unprofitable ai business
- ipo valuation slide
Companies and tickers mentioned
- Anthropic
- SpaceX
Watch the episode
Watch “Anthropic IPO: Why I’m Not Rushing to Buy at $1 Trillion” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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