Anthropic submitted an amended prospectus to the Securities and Exchange Commission revealing that third-quarter revenue surged to $17 billion while outstanding infrastructure commitments reached $895.4 billion, testing market appetite ahead of its planned initial public offering.
Technology Stocks Tumble Before Initial Public Offering
The artificial intelligence company is widely expected to launch its initial public offering before the end of November, targeting a market valuation between $1.5 trillion and $2 trillion. However, those plans collided with a broader technology stock sell-off on Thursday. The drop sent the Nasdaq tumbling more than 5 percent, while the S&P 500 and Dow Jones Industrial Average dropped nearly 4 percent and more than 3 percent, respectively. Declines were led by companies including AMD, Broadcom, Micron, Nvidia, and Tesla.
WSJ: Investors have cut their expected Anthropic IPO valuation from about $2T to $1.5T, and some now say $1T is more realistic. Its all about politics now after the midterm, rather than Anthropic’s own numbers. Since midterm wins by democrats, the fear of data center… pic.twitter.com/keXBGjf8UR
The market rout followed the United States midterm elections on Tuesday, which swept Democrats into power in the House and Senate and raised questions among investors regarding the nationwide data center build-out. Artificial intelligence-linked stocks plunged on concerns about the data center build-out after Democrats won control of the US Congress in the midterm elections. Meta president Dina Powell McCormick stated at an industry event on Wednesday that building data centers will be harder following the election results. Prediction market odds on Kalshi for Anthropic filing its IPO by November 30 plunged from 84 percent to 60 percent on Thursday afternoon, while odds for a December 31 filing fell from 90 percent to 74 percent. Potential investors are pressing for a more attractive valuation, viewing the $1.5 trillion figure as the high end of expectations.
Revenue Growth Decelerates as Operating Losses Mount
According to the revised S-1 filing submitted on November 2, Anthropic generated $17 billion in revenue during the third quarter ended September 30. That figure is more than 11 times higher than the same period last year, but it reflects a deceleration in sequential growth. Top-line quarterly growth dropped to 47 percent, down from 144 percent in the second quarter.
“.. three major investors who plan to participate in the IPO say the valuation will likely need to come down, with one saying it could be closer to $1 trillion.”@WSJ $ANT https://t.co/lAjveTKiMJ pic.twitter.com/aQJmCrbnqX
Operating expenses of $17.52 billion edged above third-quarter revenue, shifting the company from a $974 million operating profit in the second quarter to a $567 million operating loss. The quarter included a $5 billion charge for short-term computing costs, incurred because hardware demand outpaced supply, alongside a $2 billion non-cash charge connected to an employee donation matching program. Total net losses for the first nine months reached $104 billion.
The filing also detailed outstanding infrastructure commitments totaling $895.4 billion, covering computing power, chips, and data center leases with partners such as Google and Broadcom. Stijn Van Nieuwerburgh noted that supplier financing supports construction, but paying for it ultimately requires revenue from end customers.
Michael Burry Questions Massive Spending Commitments
Prominent investor Michael Burry raised concerns over the updated prospectus in a Substack post on Wednesday, pointing specifically to the scale of the company’s spending commitments against projected revenues. Writing that the firm is priced for optimism, Burry stated that it is betting its entire existence on that optimism.
He added, I have no plans to pursue shares of Anthropic, and I do not expect to be a shareholder anytime soon.
Burry questioned whether major partners were helping dress up financial results ahead of the stock market debut.
"Anthropic reported updated financials as part of an amended Form S-1 filing with the Securities and Exchange Commission on Monday" https://t.co/PCBqNsdisO
Meanwhile, managing partner Li Zhaoyu of Amont Partners noted that the pricing valuation hinges on October annual recurring revenue figures, warning that management may struggle to secure a $1.5 trillion valuation without meeting specific year-end run-rate thresholds. Rick Meckler at Cherry Lane Investments observed that these firms will remain part of the future, noting that investors still maintain significant interest despite market turbulence. Anthropic plans to list on the Nasdaq under the ticker symbol ANT, with Morgan Stanley and Goldman Sachs leading the offering.
Earlier coverage: Anthropic Files S-1 for Nasdaq IPO with $17B Revenue
BREAKING: Major investors are “increasingly skeptical” that Anthropic’s IPO can proceed at the expected valuation of $1.5 trillion after today’s market drop, per WSJ. One major investor said Anthropic’s valuation will need to come down to $1 trillion. This marks a major…