Anthropic's IPO pricing may be lowered to 1 trillion US dollars

On Wall Street, expectation management is often more lethal than the financial report itself.

With less than two weeks left before the planned listing bell-ringing scheduled for the week of November 16, Anthropic's listing process has encountered the most substantial setback. According to sources familiar with the matter cited by The Wall Street Journal, three core institutional investors planning to participate in this IPO have explicitly stated their opposition to the original $1.5 trillion valuation target set by Anthropic. One of the investors said bluntly that the final valuation may need to be "close to $1 trillion".

In fact, institutional investors' concerns about valuation have existed before; the sharp deterioration of market sentiment brought about by the massive sell-off of tech stocks this Thursday has further amplified this divergence. Two other investors raised the possibility of delaying the listing, and "reducing the issuance size" — that is, issuing fewer shares at a lower valuation — has also been listed as an alternative option.

From $1.5 trillion to $1 trillion, this is not a simple digital pullback, but means that Anthropic's plan that was originally expected to set the record for the largest IPO in human financial history is being repriced by the buy-side institutions in the public market at the negotiation table. The ambitious original plan to raise up to $100 billion, easily surpassing the $86 billion record set by SpaceX, is now facing the risk of a significant shrinkage. Executives and underwriters (Goldman Sachs and Morgan Stanley) are expected to hold an emergency meeting in the next few days to review the plan.

Previously, we saw a plunge in the probabilities on Kalshi and Polymarket on prediction markets, which was the immediate reaction of "retail investors and speculative capital" to the macro environment. Now, the opposition backed by real money from large mutual funds, sovereign wealth funds and pension institutions means the unfathomable valuation gap between the primary market and the secondary market is being forcibly bridged.

Investors' Calculation: No Paying for "Science Fiction"

Why do investors demand a "price cut" at this very node? On the surface, the direct trigger is the Nasdaq index's plunge of over 5% on November 5 and the semiconductor sector's sharp drop of over 12%. But the deeper reason is that institutional investors, after carefully studying Anthropic's Form S-1, have re-measured the "risk-return ratio" of the AI business model.

In the private primary market, venture capital (VC) is willing to pay a high premium for the grand vision of AGI, the founder's prestige, and the monopoly position in the next decade. But institutional investors in the public market follow a different logic: what they buy is the discount of future cash flow, and they focus on the health of the balance sheet and the expansion curve of gross margin.

However, Anthropic's prospectus has exactly exposed astonishing exposure on these hard indicators. Documents show that Anthropic has signed computing power and infrastructure contract commitments as high as $895.4 billion, of which about $447.5 billion will expire successively by the end of 2030. To support this massive computing power, Anthropic has committed to pay SpaceX $1.25 billion per month, which is expected to rise to about $3.1 billion later. At the same time, although the company achieved revenue of $17 billion in the third quarter, it turned directly from profit in the second quarter to an operating loss of $567 million due to a $5 billion surge in computing costs in a single quarter.

Institutional investors have done the math clearly: for a company whose cash flow has not yet turned positive and has locked nearly $900 billion in irrevocable bills for the next five years, if it is priced at $1.5 trillion, its implied forward growth expectation and profit margin must reach a level that is unprecedented in human commercial history. Before Thursday's plunge, during the frenzy of abundant liquidity, some fund managers might have been willing to subscribe reluctantly; but when the macro environment changes and tech stock valuations contract across the board, they are no longer willing to pay for such extreme assumptions.

Cutting the valuation to $1 trillion does not mean that Anthropic is only worth that amount, but the "margin of safety" that institutional investors are willing to give at the moment when the risk premium rises sharply.

The Dilemma Facing Goldman Sachs and Its Peers: The Prisoner's Dilemma of Price Cuts, Scale Reduction and Postponement

For the underwriters and Anthropic's executive team, the emergency meeting in the next few days will be a painful trade-off. Each of the three options on the table comes at a cost.

The first option is to force issuance at a reduced price. Lowering the valuation to around $1 trillion will still ensure that it ranks among the companies with the highest market value in the world, and also ensure the smooth progress of the IPO. But the cost is that the sharp pullback in valuation will, to a certain extent, burst the premium bubble in the AI industry. For early employees and investors, the value of options will be significantly diluted; for the company, the cost of subsequent refinancing through additional issuance or bond issuance will also rise accordingly.

The second option is to reduce the issuance scale. Sell fewer shares at a $1 trillion valuation, for example, cut the financing target from $100 billion to $50 billion, trying to maintain the decency of no break on the first day of listing with fewer chips. But the problem is that Anthropic is extremely hungry for capital. It needs massive funds to pay the computing power bills of cloud giants and maintain the arms race. If the IPO cannot raise the expected $100 billion, it will have to rely on high-cost debt financing or secondary additional issuance immediately after listing, which will continue to suppress the stock price in subsequent earnings seasons.

The last option is to postpone the listing. Wait for market sentiment to recover, wait for the policy uncertainty brought by the election to clear, and wait for the next earnings report to prove profitability. But "postponement" is the most taboo signal in the public market. At a time when the AI arms race is iterated on a monthly basis, delaying the listing not only means that it may fall behind OpenAI and Google in computing power procurement, but also makes the market suspect that there are loopholes in its finances that cannot withstand public scrutiny. What's more, who can guarantee that the macro environment in a few weeks or months will definitely be better than it is now?

There is no optimal solution among these three choices, only the one that picks the lesser of two evils.

The Break of Valuation Anchor and the Chain Revaluation of the AI Industrial Chain

The twists and turns in Anthropic's IPO pricing have far-reaching impacts that go far beyond this single company. As "the first truly public pricing" in the field of leading large AI models, its valuation is becoming the anchor point for the entire industry.

When investors demand that Anthropic's valuation be significantly cut to $1 trillion, this wave will also burn to OpenAI. OpenAI President Brockman recently said that the company may be ready for an IPO in 2027, and is currently trying to raise a round of private placement at a valuation of $1.25 trillion. If even Anthropic, which currently has an advantage in the To B enterprise service end and has relatively transparent cash flow status, encounters a sharp price cut in the public market, OpenAI's subsequent financing and listing path will become more difficult.

More far-reaching chain reactions will occur at the infrastructure layer. Over the past four years, the skyrocketing of giants such as Nvidia, Microsoft and Amazon has been built on the expectation that "AI labs can raise unlimited funds and purchase computing power on a large scale". If Anthropic's IPO cannot bring the expected capital inflow, or it needs to use the raised funds immediately to pay off previous computing power arrears, the market's expectation for the next round of data center construction will be discounted. This will not only suppress the valuation of chip stocks, but also make cloud giants more cautious in expanding their capital expenditure (Capex).

In Newtonian mechanics, when external force no longer provides sufficient thrust, huge mass will accelerate to fall. In the capital market, this mass is the high valuation and huge committed bills, while the external force is abundant market liquidity and trust in grand narratives. Thursday's plunge took away part of the thrust, and the "sharp valuation cut" demanded by institutional investors is them using real money to reset the gravitational constant.

Anthropic may eventually ring the bell on Nasdaq, but what it rings will no longer be the highest note of AI mania, but a forced concession to commercial laws.

This article is from the WeChat official account "Tech Business", written by Zisen and Haiyi, and published with authorization from 36Kr.