Anthropic IPO Priced Below Expectations Amid Shifting AI Market Sentiment
The AI company is targeting a valuation of up to $1.4 trillion in a historic public offering, though recent market volatility has tempered initial investor hopes for a higher price.
By Khalid Khalil ·
Anthropic, the artificial intelligence lab known for its Claude chatbot, is preparing for an initial public offering that could value the company at up to $1.4 trillion US on a fully diluted basis. This figure, while still historic, falls slightly short of the $2 trillion valuation that some investors had previously discussed. The reduction in expected value reflects a broader reassessment of AI companies in a more challenging economic environment, where investors are scrutinizing the costs required to sustain rapid growth.
The company aims to raise up to $64.4 billion US by selling 825 million shares at a price of up to $78 US per share. In addition to the public offering, Anthropic is securing $26 billion US through a separate private placement deal with cornerstone investors. These partners include Alphabet, Nvidia, and Advanced Micro Devices. In total, the share offering and private investments are expected to generate up to $90.4 billion US for the firm.
Ipek Ozkardeskaya, a senior analyst at Swissquote Bank in Geneva, noted that the current situation represents a reassessment of Anthropic's value. She explained that while the company continues to post impressive growth, investors are increasingly focused on the financial commitments necessary to maintain that trajectory. The shift in valuation signals a change in focus from revenue growth alone to the significant spending required to support it.
Details of the IPO were briefly circulated to investment banks late on Monday before being retracted, according to emails seen by Reuters. The preliminary terms suggested a higher price range and potential proceeds of up to $69.3 billion US. However, the updated prospectus filed with the U.S. Securities and Exchange Commission on Tuesday contained lower terms, indicating a more conservative approach to the offering.
The listing comes at a time of heightened scrutiny for the AI sector. Nvidia joined the deal amid an ongoing FBI probe into its CEO, Jensen Huang, which has also triggered an internal investigation. Meanwhile, the Nasdaq experienced its deepest one-day drop in 19 months on Thursday, wiping out trillions in market value. This decline was driven by fears of increased regulation on data center construction following significant Democratic gains in the U.S. midterm elections.
Despite the political backdrop, Anthropic adopted President Donald Trump's preferred term for the technology, "Super Intelligence," in its IPO filing. The document outlined a vision to bring forth an age of miracles while simultaneously warning of existential risks. The prospectus detailed various threats, including the possibility that competitors could develop faster models and that AI advancements might outpace the company's ability to implement adequate safety measures.
Anthropic's financial performance has been robust, with run-rate revenue reaching roughly $81 billion US as of October 31, up from $71 billion US on September 30. Net loss narrowed in the third quarter as revenue jumped 47 per cent from the previous quarter to $16.96 billion US. The company attributes this growth to the rapid adoption of its Claude models in sectors such as health care, financial services, and legal services.
However, this growth is supported by enormous infrastructure costs. The company has nearly $900 billion US in computing commitments with partners like Amazon and Alphabet. These commitments highlight the dependency on vast amounts of future computing capacity. The IPO follows SpaceX's record-breaking listing in June, where the company raised $75 billion US at a valuation of nearly $1.75 trillion US.
Anthropic was founded in 2021 by researchers who left OpenAI due to disagreements over governance and AI safety. It is currently led by CEO Dario Amodei. The company's investors include Altimeter Capital, Dragoneer, Greenoaks, and Sequoia Capital. Its last private valuation was $965 billion US.
The shares are expected to trade on the Nasdaq under the ticker symbol ANT after the IPO closes. Goldman Sachs and Morgan Stanley are leading the syndicate of investment banks underwriting the offering. Certain board members and affiliated entities have indicated interest in purchasing up to $303 million US of the shares. This listing makes Anthropic one of the few major companies to go public this fall, a period marked by higher borrowing costs and geopolitical tensions.
