Anthropic Pushes Ahead With IPO Despite AI Selloff, Valuation Could Drop Another 20%

Despite the recent severe selloff in AI stocks, Anthropic has decided to press ahead with its initial public offering (IPO) under market pressure. This large-scale listing will directly test public market risk appetite and pricing willingness for cutting-edge AI assets.

According to the latest report from The Wall Street Journal, investors last week expected Anthropic's valuation target to be around $1.5 trillion, but after the sharp decline in AI company stock prices, some major investors now want to lower the target valuation. Company executives have already met with bankers from Goldman Sachs and Morgan Stanley to discuss the final valuation range.

Bloomberg reported on Nov. 6, citing people familiar with the matter, that some potential investors have discussed lowering the valuation to around $1.2 trillion to $1.3 trillion, with some even considering as low as $1.1 trillion. This would represent a reduction of about 20% from the earlier $1.5 trillion target.

The report noted that Anthropic has arranged meetings with key investors this week, aiming to have its stock begin trading next Thursday or Friday. The company could still delay its valuation target to wait for more favorable market conditions, but that could trigger market panic.

The progress and final pricing of this IPO will not only affect Anthropic's own fundraising scale but also serve as a bellwether for the valuation of the entire AI industry chain, directly influencing the market's reassessment of AI infrastructure's high capital expenditure and its commercialization prospects.

Racing to List Before Thanksgiving, Valuation Expectations Face Downward Revision

Anthropic's IPO timeline has entered a critical stage.

According to Bloomberg, under relevant regulations, after publicly filing its prospectus on Oct. 26, Anthropic could officially launch its IPO roadshow as early as Nov. 10. If all goes smoothly, the company expects to complete pricing during the week of Nov. 16, with the goal of listing on the Nasdaq under the ticker "ANT" before the U.S. Thanksgiving holiday on Nov. 26.

However, extreme market volatility has made valuation the core of negotiations. Months ago, the market discussed a valuation of around $2 trillion, but Anthropic now almost certainly must accept a valuation far below that. Bloomberg reported on Nov. 6, citing people familiar with the matter, that some potential investors have discussed lowering the valuation to around $1.2 trillion to $1.3 trillion, with some even considering as low as $1.1 trillion.

For investment banks, pricing strategy is crucial. If the target is set too high, it could hurt investor demand and cause the stock price to fall; if the range is too low, the company and bankers will be criticized for "selling cheap." In practice, bankers sometimes encourage companies to propose a price range slightly below expectations so they can later raise the price citing strong investor demand. The documents expected to be filed this week will detail the number of shares to be sold and the price, and may reveal prominent investors who have committed to subscribe at the IPO price.

Political and Market Headwinds, AI Concepts Face Revaluation

The challenges facing Anthropic's IPO stem not only from divergent investor views on its own valuation but also from changes in risk appetite across the entire AI industry chain. After the U.S. midterm elections, a group of AI skeptics came to power and proposed pauses that could slow U.S. data center development, causing Nasdaq Composite Index constituents to lose $2.5 trillion in market value in a single day.

Market volatility has pushed the Chicago Board Options Exchange Volatility Index (VIX) above 25, even exceeding 28. Matt Kennedy, senior strategist at Renaissance Capital, said that when the VIX is above 25, companies typically consider delaying IPOs. Additionally, investor concerns about massive AI investments and the lack of clarity on potential returns are growing. Anthropic's competitor OpenAI raised less than half of its initial target in its latest funding round, with a valuation below the $1.25 trillion target.

However, the market has since shown some stabilization. The rebound in the S&P 500 and the Philadelphia Semiconductor Index, along with the VIX pullback, may provide additional confidence for Anthropic to proceed with its listing. Matt Kennedy believes that Anthropic's IPO is different from typical corporate listings, and the current market environment may not be enough to force it to delay, but investors may demand higher discounts and valuation concessions.

High Growth Faces Slowdown, Investors Focus on Computing Costs

Another core of the valuation dispute lies in whether Anthropic can prove its revenue growth is sufficient to support the massive IPO valuation. The prospectus shows that Anthropic's third-quarter revenue reached $16.956 billion, up 1,127% year-over-year. However, signs of slowing growth have emerged, with the quarterly growth rate dropping to 47%, far below the second quarter's 144% quarter-over-quarter growth.

Profitability is also under pressure. In the third quarter, Anthropic posted an operating loss of $567 million and a net loss of $23.291 billion. The swing to a loss was mainly due to approximately $5 billion in short-term compute purchase costs and about $2 billion in non-cash expenses related to an employee donation matching program. More concerning for the market is that the disclosed total commitments for computing capacity purchases and infrastructure spending amount to a staggering $895.4 billion.

According to Reuters, investors are now waiting for Anthropic's October revenue data, hoping to gauge whether the company can reverse the recent growth slowdown. Revenue performance, enterprise customer usage, and the ability to control computing costs will be key metrics investors focus on during the roadshow.

Record-Breaking Fundraising Possible, Industry Benchmark Significance Highlighted

As one of the first companies focused on developing cutting-edge AI models to attempt entering the public market, Anthropic's offering size and pricing will provide an important reference for the entire AI industry.

The market is closely watching whether Anthropic's IPO can match the record performance of Elon Musk's SpaceX. SpaceX's previous offering was valued at approximately $1.77 trillion, raising between $75 billion and $86.2 billion. According to Reuters, Anthropic's offering size could even reach $100 billion.

Led by Goldman Sachs and Morgan Stanley, with 20 other banks participating in this mega-IPO, the actual subscription situation will provide a clear signal: after a significant correction in AI concept stocks, how much premium the public market is willing to pay for the long-term growth potential of cutting-edge AI companies.

Risk Warning and Disclaimer

Markets involve risk, and investment requires caution. This article does not constitute personal investment advice and does not take into account individual users' specific investment objectives, financial situations, or needs. Users should consider whether any opinions, views, or conclusions in this article are appropriate for their particular circumstances. Investing based on this article is at your own risk.