Anthropic targets $1.4 trillion IPO valuation, below investor expectations

The latest:

Anthropic will seek a valuation of as much as $1.4 trillion on a fully diluted basis in its initial public offering, Reuters reported, slightly below what some investors had expected. The Claude maker and some existing shareholders are offering 825 million shares at $70 to $78 each, raising up to $64.4 billion. Trading is expected to begin on Nasdaq on November 19 under the ticker ANT.

Details:

• The numbers: At the top of the range, Anthropic would be worth about $1.4 trillion fully diluted, counting stock options and restricted stock, Reuters reported. Excluding those securities, the market value would be roughly $1 trillion. The company was last valued at $965 billion privately.
• The private placement: Anthropic will also raise $26 billion through a separate private placement with cornerstone investors including Alphabet’s Google, Nvidia, Advanced Micro Devices, Broadcom, Micron Technology, Microsoft and TSMC, according to Reuters, bringing the total share offering to as much as $90.4 billion.
• The retraction: IPO details were briefly circulated to investment banks late Monday before being pulled back, according to emails seen by Reuters. Preliminary terms showed proceeds of as much as $69.3 billion. The updated prospectus filed with the Securities and Exchange Commission on Tuesday carried a lower price range.
• Revenue trajectory: Run-rate revenue stood at roughly $81 billion as of October 31, up $10 billion from September 30, according to the IPO filing. The company has not disclosed how that growth translates into profitability, a question investors have pressed across the sector as capital spending accelerates.
• The spending side: The filing shows nearly $900 billion in computing commitments with partners including Amazon and Alphabet’s Google. Reuters noted some of that capacity depends on financing beyond Anthropic’s control, tying expansion to outside credit conditions at a time of elevated interest rates.
• The risk disclosures: The prospectus described a vision to “bring forth an age of miracles” while warning of existential risks to humanity. It also flagged that rivals could develop models faster and that AI advances could outpace Anthropic’s ability to install adequate safety and security measures.
• Analyst reaction: Varun Datta of Truth Ventures assessed that Anthropic could become an exceptionally successful company but that much of that success is already priced in. Jeff Zell of IPO Boutique judged that pricing near 20% below expectations lets investors bid the offering up rather than face a take-it-or-leave-it deal.
• Market backdrop: The Nasdaq fell 1.2% in afternoon trading on worse-than-forecast inflation data, Reuters reported. Shares of Anthropic investor Amazon rose 1%, outperforming other big-tech peers. AI-related stocks have sold off recently on expectations of tighter oversight and regulatory hurdles.
• The comparison: The offering is the year’s most closely watched since SpaceX, which raised $75 billion at a nearly $1.75 trillion valuation in June. Goldman Sachs and Morgan Stanley are the leading underwriters. Certain board members and related entities are set to buy up to $303 million of shares.

Background:

Anthropic was founded in 2021 and is led by CEO Dario Amodei. Its Claude models drove the demand surge behind the company’s revenue growth, and its private valuation climbed to $965 billion before the IPO filing.

Between the lines:

The gap between the roadshow price and earlier bank terms is what investors will read first: a $69.3 billion target cut to $64.4 billion, in a week when the Nasdaq is falling on inflation data, suggests the owners chose a cushion over a maximum. Nearly $900 billion in computing commitments against $81 billion in run-rate revenue explains why.

What’s next

Shares are expected to begin trading on Nasdaq on November 19 under the ticker ANT. Investors will also watch rival OpenAI, which is seeking $30 billion in what is expected to be its final private round.