NEE-T

Anthropic could raise up to $63 billion in an IPO expected to take place next week

Anthropic shares could reportedly start trading next Thursday or Friday.

Anthropic has officially set the price range for its highly anticipated initial public offering, opening the door to a valuation of more than $1 trillion.

In an updated version of its prospectus, Anthropic (ANT) on Monday revealed plans to sell 801.3 million shares at between $70 and $78 a share, with an additional 23.6 million shares to be sold by existing shareholders. In a statement, the maker of the Claude chatbot said it would not receive any proceeds from the sale of those shares held by existing investors.

Based on the roughly 13.1 billion shares disclosed in the prospectus, Anthropic is targeting a valuation just north of $1 trillion at the high end of its pricing range. But factoring in the implied diluted share count means the valuation is about $1.3 trillion.

Anthropic also said it expects to give its team of underwriters a 30-day greenshoe option to buy an additional 123.7 million shares.

Excluding that option, Anthropic could raise as much as $62.5 billion in proceeds from its IPO, based on its declared range. If underwriters were to exercise it, Anthropic could add another $9.6 billion to its coffers.

Anthropic said Tuesday that it was launching its roadshow, where it will make its pitch to investors through a series of virtual and in-person meetings alongside its underwriters. That will set it up to go public as soon as next week, experts say.

The Wall Street Journal reported recently that the company aims for its shares to start trading next Thursday or Friday.

The company did not immediately respond to a request for comment by MarketWatch.

Investors had, at one point, expected a $2 trillion valuation from Anthropic, which would have surpassed SpaceX's (SPCX) record set earlier this year. It's still expected to launch the world's second-biggest IPO by proceeds, beating out the U.S. listing of SK Hynix (SKHY), according to the research firm Renaissance Capital.

But now Anthropic's IPO is set to come out against a backdrop of recent market volatility and concerns about the data-center landscape.

While the recent market correction hasn't changed the underlying AI story, it has shifted valuation expectations, said Christian Stocker, lead equity strategist at UniCredit, in a note to clients on Monday.

"Investors might approach this IPO cautiously and if the IPO disappoints, then there might be a more systemic repricing of the AI story. In this sense, this IPO is really a test of how convinced investors are about the pace of this technological transformation," Stocker wrote.

Justin Menne, a portfolio manager at Harbor Capital, told MarketWatch that Anthropic's lower IPO valuation range, "would of course be a negative" relative to the valuation target of $2 trillion that was widely reported in August.

"What's interesting though, is that I don't think investor expectations in terms of revenue growth have moved materially," Menne said in an email. He pointed to an expected annual revenue run rate of about $100 billion at the time of the $2 trillion valuation expectation and added that "investors still expect the company to reach that level at the end of this year."

Menne co-manages the Anthropic AI Lab Ecosystem ETF ANTW, which was launched in August to track the performance of vendors and customers associated with Anthropic.

Anthropic also announced a slew of separate deals with major tech giants to buy a total of $26 billion worth of its Class N stock after the offering is completed. Nvidia (NVDA) will invest $10 billion, while Alphabet (GOOG) (GOOGL) will also buy $10 billion as part of an earlier commitment.

Advanced Micro Devices (AMD) will buy $2.5 billion worth of stock, while TSMC (TSM) has agreed to buy $500 million. Micron Technology (MU), Microsoft (MSFT) and Broadcom (AVGO) aim to purchase $1 billion each.

Those agreements would help Anthropic raise proceeds closer to the $100 billion goal it was once targeting, according to the Wall Street Journal. At the midpoint of its proposed offering, and factoring in the greenshoe option and private sale to tech firms, proceeds could come out to roughly $93.7 billion.

Menne called Anthropic's revised valuation "fairly reasonable given the fundamentals," because the midpoint of its target IPO pricing range would "put the company at a premium" to Alphabet and to Meta Platforms (META) when looking at price-to-sales ratios, but at a discount to Microsoft (MSFT) on the same basis.

"The premium closes if you extend the multiple out to expected 2028 revenue, given the relatively higher expected growth rate for Anthropic relative to those other companies," Menne added.

Evan Schlossman, a principal at Neostellar Capital (NSLR), said investors should ask: "When I look at this company, two or three years out, do I see a $2 or $3 trillion company?"

He called Anthropic "an extraordinary company doing important things," while noting that investors buying shares of Anthropic at the IPO price "have to be underwriting growth."

Schlossman's firm owns OpenAI's privately held shares but doesn't have an investment in Anthropic because sticking with one major player in the space is in keeping with the firm's investment philosophy.

-William Gavin -Philip van Doorn -Barbara Kollmeyer