Anthropic investors push to cut IPO valuation after AI stock rout

Anthropic’s planned $1.5 trillion initial public offering is facing investor pressure after Thursday’s sharp selloff in AI stocks, with three major investors telling The Wall Street Journal that the valuation will probably have to drop. Investors now see a possible market value between $1 trillion and $1.3 trillion, according to Bloomberg and the Journal, with one estimate near $1 trillion. The company has been aiming to list on Nasdaq under the ticker “ANT” during the week of November 16 and raise up to $100 billion, which could be the largest IPO in history. Anthropic made its IPO filing public in late October and filed an updated S-1 this week with newer revenue and expense figures.

The pressure follows a rout that erased roughly $2.5 trillion from Nasdaq Composite companies on Thursday. The S&P 500 closed down 4.4%, the Nasdaq 100 fell 6.3%, the Philadelphia semiconductor index dropped 12.3%, and Nvidia declined 9.2%, according to NBC News. Stocks partly recovered Friday morning, with the Nasdaq Composite up 1.4% and Nvidia up 3.4% as of 11:21 a.m. ET, according to Yahoo Finance.

Tuesday’s midterm elections strengthened politicians skeptical of AI expansion and raised concerns that data center development could face new restrictions. Democrats are preparing bills on data center electricity costs, independent evaluation of advanced AI models, and AI firm liability, Reuters reported, and they plan closer review of leading AI companies including Anthropic. Gina Hinojosa, the incoming Texas governor, has said she would halt data center approvals in a state that hosts over 25% of the data center capacity planned for the country, CNBC reported.

Anthropic’s public disclosures have shown rapid revenue growth alongside large losses and infrastructure commitments. The business passed an $80 billion annualized revenue run rate by late October, up from September, and it held about $146.6 billion in cash on Sept. 30, the Journal reported. Some investors want to see the company’s October results before assuming a lower valuation.

That is down sharply from the roughly $2 trillion valuation that investors were projecting last month, and from the $2 trillion figure in a leaked September draft filing reported by Decrypt. Anthropic has not committed to a final valuation, fundraising target, or timetable.

One prospective investor said Anthropic could cut the amount it seeks from $100 billion to roughly $80 billion and still come out of the offering with more than $200 billion on its balance sheet. Another investor raised the possibility of delaying the listing until market conditions improve, though that could be risky if institutional investors remain cautious after the selloff. Anthropic’s executives and financial advisers are expected to convene in the next few days to weigh their options, according to the Journal. PitchBook analyst Nalin Patel told The Telegraph that a postponement “would protect against near-term valuation risks and would be more likely if the correction sustains over a longer period”.

OpenAI, Anthropic’s principal rival, has obtained about $11 billion of the $30 billion it originally aimed for in its latest funding round, according to the Journal, which valued the ChatGPT developer at approximately $1.25 trillion, below initial expectations. Prediction markets have also pushed back expectations, with Polymarket odds of an IPO by November 20 at 43% and odds of a listing by year-end at 71%. Its valuation, fundraising target, and listing date remain open.