Anthropic is about to go public. On Tuesday, the company set a price range of $70 to $78 per share. It plans to price the deal on November 18 and start trading on the Nasdaq under the ticker ANT on November 19. At the top of that range, the fully diluted valuation comes to around $1.4T, and the Financial Times has reported that the bankers expect to price above it, which would mean $1.5T or more. Together with a $26B private placement to Google, Nvidia, AMD and other suppliers, the total raise comes to about $90B, more than the $86.2B that SpaceX raised in June.
I should say up front that I am usually not a fan of IPOs. The companies choose the moments they go public, and they choose the moment that is best for them, which is often not a great price for the people buying the shares. Professor Jay Ritter’s data shows that the average IPO pops 17.7% on its first day and then trails the market by 20.5 percentage points over the next three years. This time might be a bit different, and I will get to it in the article.
Anthropic’s filing is not only important for the company but for the broader industry. For the first time, we get to look inside a frontier lab with real numbers. The S-1 is more than 300 pages on how fast the business is growing, what the margins actually are, how the compute is bought and from whom, and where the company thinks the next wave of revenue comes from. Until now, we had to piece that together from leaks and alternative data.
The timing is interesting for another reason too. A few things are changing for the frontier labs right now, and most of them are tailwinds. Even if you never plan to own a single share of Anthropic, this IPO tells you a lot about Amazon, Google, Microsoft, Nvidia, and the software sector.
In this article, I cover:
The numbers in the S-1
Does the valuation make sense?
The distillation crackdown and what we might expect next
The next big vertical after coding
Gross margins and the SpaceX compute deal
Four chip suppliers at one table, and Anthropic Direct. A new trend for the cloud providers?
SaaS apocalypse round 2?
Let’s dive in.