Anthropic mailed bankers details of its blockbuster $69 billion IPO filing, only to retract it later saying that some of the pricing details were incorrect, as per a report by Reuters, citing sources. This comes amid growing investor concerns over the AI giant’s massive valuations as the AI frenzy fizzles out.
The maker of Claude chatbot first sent a copy of the filing in which it said it will sell around 867 million shares in a price range of $70 to $80 per share, but a follow-up email said the details about the pricing were inaccurate and it would update the filing later, the report added, citing the emails Anthropic sent to bankers late on Monday.
Notably, this comes amid rising buzz around Anthropic’s suggested $1.5 trillion valuation that has been facing worries as the global AI frenzy fizzles out. Several analysts are questioning the massive valuations.
Michael Burry warns of red flags in Anthropic IPO filing
Popular American investor Michael Burry has been ramping up his bets against AI stocks, warning that the artificial intelligence bubble is set to burst. After Claude-maker Anthropic filed its IPO papers, Burry pointed out several red flags, saying that they show that the AI industry is “catastrophically vulnerable”.
Burry in a Substack post pointed to Anthropic's huge spending commitments, slowing revenue, and tangled ties, according to a Business Insider report. The American investor noted that the AI company has struck deals to buy about $537 billion of compute from Amazon, Alphabet, and Microsoft, and reached preliminary agreements worth hundreds of billions more with others such as SpaceXAI. This puts its total commitments at about 12 times its current annual run-rate revenue.
"This is not stated clearly in the S-1, and in my view it is the most deserved headline from it," Burry wrote in a Tuesday Substack post. "Overall slowing of growth is not attributed to a decline in tokenmaxxing, but I did not expect that to be mentioned,' he added.
Also read | Michael Burry says Anthropic IPO papers show AI industry is 'catastrophically vulnerable'. What the 'Big Short' investor sees
Aswath Damodaran trims Anthropic's IPO valuation
Veteran valuation expert Aswath Damodaran initially valued the company at $1.475 trillion, placing the AI firm just below the lower end of the widely discussed $1.5 trillion to $2 trillion IPO pricing range. In his blog post, Damodaran stated that Anthropic’s story will continue to evolve and change once it starts trading. “Given AI's presence in the economy and markets, I can guarantee you that it will be a roller coaster.”
Damodaran later trimmed his valuation estimate for AI giant Anthropic to $1.45 trillion, from his earlier estimate of $1.475 trillion which was already lower than the industry estimates of $2 trillion. The 'Dean of Valuation' in a long blogpost said his earlier valuation estimate which was lower than the overall market view received strong reactions. Some of them were solely based on emotion, he said, as they held strong conviction in the company. Some of it was based on cost of capital, which the analyst believes reflects a fundamental disconnect with market history, current market pricing and basic business sense.
His latest $1.45 trillion valuation accounts for the trailing 12-month revenue and operating income numbers to include the just-leaked third quarter numbers. “The equity value that I obtain for Anthropic is close to the lower end of the offering price estimates, but as I noted at the time that I posted it, and will reinforce again now, it is a function of not just my upbeat story about the company, but also one about how the AI products and services market will evolve over time,” he wrote.
Also read | Aswath Damodaran trims his Anthropic IPO valuation to $1.45 trillion; Dean of valuation explains why
Disclaimer: This article has been written by Debaroti Adhikary, who is not a SEBI-registered Research Analyst or an Investment Adviser. Debaroti Adhikary and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.
