The recent technology selloff is casting doubt on one of the most anticipated AI listings of the year. Anthropic's proposed $100 billion initial public offering, which had been expected to value the company at around $1.5 trillion, is now facing investor skepticism and potential delays.
According to Reuters, prospective investors are pushing for a more attractive valuation, with some viewing the $1.5 trillion figure as at the higher end of expectations. The Wall Street Journal reports that major investors are increasingly doubtful the blockbuster IPO can proceed at the expected valuation following the market downturn linked to AI-related investments.
The Nasdaq Composite fell as much as 5% on Thursday amid a technology rout, raising questions about investor appetite for AI assets after a prolonged period of enthusiasm. This volatility has led some to predict the IPO will be postponed. Arvind Sanger, managing partner at Geosphere Capital, told CNBC-TV18 that unless the market recovers quickly, the IPO is likely to be pushed back, possibly to December or even next year.
Valuation Disputes Emerge
The proposed $1.5 trillion valuation is a key sticking point. Three major investors planning to participate believe the valuation will need to come down, with one suggesting it could be closer to $1 trillion, according to the WSJ. Anthropic may also have to offer a larger discount to secure commitments, given its quarterly losses and substantial financial obligations to AI infrastructure partners.
The company could raise less than the anticipated $100 billion, with one investor expecting the offering to be closer to $80 billion. That same investor hopes Anthropic will have well over $200 billion on its balance sheet after the IPO.
This valuation debate marks a shift from earlier enthusiasm, when investors viewed Anthropic as a "must-own" name. Some prospective investors are waiting to review the company's October financial results before pushing for a valuation reduction. Anthropic's revenue run rate topped $80 billion at the end of October, up from the previous month, the WSJ reported. Investors are also awaiting the October revenue figure, which was left blank in its updated S-1 filing, to assess whether growth has accelerated after a slowdown.
Market Conditions Threaten Timeline
Even if valuation is agreed upon, broader market conditions could determine whether the IPO proceeds before year-end. The political environment has added to investor concerns, with policy changes, congressional gridlock, and growing opposition to AI infrastructure and data centre construction emerging as risks following Democrats' gains in the midterm elections. Ballot initiatives in several states seeking to restrict data centre development have highlighted political challenges.
If market conditions remain unfavourable, Anthropic could postpone the offering until investors are more willing to absorb a transaction of its scale, Reuters reported. Persuading institutional investors to take substantial exposure to the AI sector could also prove difficult so soon after losses in the recent selloff.
Anthropic executives and advisers are expected to meet in the coming days to discuss IPO plans. The company has avoided committing to a specific timetable to preserve flexibility, the WSJ reported.
Prediction Markets Reflect Uncertainty
Prediction markets show growing uncertainty. On Polymarket, bettors assign a 29% probability that Anthropic will not complete an IPO before November 30, up 11 percentage points since Wednesday. The probability of launching on or before November 18 has fallen from 50% to 10%. Kalshi puts the probability of an IPO before year-end at 69%.
Anthropic publicly filed its Form S-1 registration statement with the US Securities and Exchange Commission in October, but no price range has been set yet.
This article is for informational purposes only and does not constitute financial advice.
