Anthropic's banks expect to price its IPO above the announced range and value the artificial intelligence company at $1.5 trillion or more when it debuts next week, after receiving strong demand from investors, the Financial Times reported.
The company sought to dispel doubts about its ability to grow revenue in line with planned spending of $900 billion on computing capacity and infrastructure over the coming years. Anthropic told investors that its annualized revenue reached $81 billion in October and that it booked $17 billion in the third quarter.
The deal came days after the US midterm legislative elections dragged tech stocks into a massive $3.2 trillion sell-off that unsettled Wall Street. Although the market recovered afterward, leverage amplified the gains and losses of many investment firms: "A weekend is an eternity in this market," said one major investor.
Buying pressure on the initial price
The underwriters indicated they would price the shares above the $70 to $78 band announced in a presentation on Tuesday. That range implied a valuation of between $1.26 trillion and $1.41 trillion on a fully diluted basis, which includes employee stock options and other restricted securities…
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The underwriting banks expect to raise Anthropic's valuation to $1.5 trillion amid high demand ahead of its stock market debut. (REUTERS/Dado Ruvic/Illustration)Anthropic's banks expect to raise the price of its initial public offering above the announced range and value the artificial intelligence company at $1.5 trillion or more when it debuts next week, after receiving strong investor demand, the Financial Times reported. The company sought to dispel doubts about the ability of its revenue to keep pace with planned spending of $900 billion on computing capacity and infrastructure over the coming years. Anthropic told investors that its annualized revenue reached $81 billion in October and that it booked $17 billion in the third quarter. The deal came days after the U.S. midterm legislative elections dragged down tech stocks in a massive $3.2 trillion selloff that unsettled Wall Street. Although the market recovered afterward, leverage amplified the gains and losses of many investment firms: "A weekend is an eternity in this market," said one major investor. The underwriters indicated they would raise the value of the shares above the $70 to $78 band announced in a filing on Tuesday. That range implied a valuation of between $1.26 trillion and $1.41 trillion on a fully diluted basis, which includes employee stock options and other restricted securities. Anthropic warned that it will not recognize parallel share transactions managed by secondary market intermediaries before its formal listing. (REUTERS/Bhawika Chhabra/File Photo)Goldman Sachs and Morgan Stanley, the banks that led the deal, received strong signals of demand when they began the investor roadshow on Tuesday. Anthropic's shareholders lowered their aspirations in recent weeks for a $2 trillion valuation, amid growing doubts about the sustainability of the artificial intelligence boom. Morningstar calculated a fair value of $1.7 trillion for the company's equity, but warned that the price could fall between $500 billion and $3 trillion depending on the pace of adoption of its tools. The breadth of that estimate reflected uncertainty about the durability of the artificial intelligence investment cycle. An increase in the share price would push the total proceeds of the IPO above $100 billion. Three investors in the company said Anthropic prioritized raising as many resources as possible to fund its demand for computing capacity, rather than maximizing its valuation. Strategic partners such as Google, Nvidia and Microsoft will invest $26 billion in a private placement linked to the IPO. (REUTERS/Dado Ruvic/Illustration/File Photo)The company also announced a private placement linked to the deal, in which strategic partners such as Google, Nvidia and Microsoft would jointly invest $26 billion at the IPO price. Anthropic's main rival, OpenAI, told its investors that its revenue grew 50% to $10 billion in the third quarter, according to a person with direct knowledge of those conversations. Some investors who secured an allocation in the offering began selling portions of their stakes to other buyers, in transactions similar to those carried out before SpaceX's debut in June. A New York broker offered up to $500 million in Anthropic shares on Tuesday on behalf of a venture capital firm, at a price 4% above the one set by the company in its IPO, according to messages reviewed by the newspaper. The tech company's IPO came after a $3.2 trillion selloff on Wall Street following the midterm elections. (EFE/SARAH YENESEL)Another venture capital group put $1.25 billion in shares up for sale through a special-purpose vehicle that allows pre-IPO investors to hold and sell portions of their position, at a $1.5 trillion valuation. Anthropic tried to restrict that mechanism and warned that it would not recognize offers made by certain secondary intermediaries; Bloomberg first reported on those parallel arrangements. Anthropic announced on Tuesday that it planned to raise up to $64 billion, with the possibility of expanding the deal by nearly $10 billion through an over-allotment option if demand exceeded supply.