Why Anthropic's IPO May Have Just Gotten a Whole Lot Riskier - The Motley Fool
By Google News AI ·
Chatbot maker and leading artificial intelligence (AI) company Anthropic plans to go public later this month, potentially at a higher valuation than even Space Exploration Technologies Corp (SPCX +3.62%), which was valued at around $1.8 trillion when it went public in June. Anthropic's valuation might top $2 trillion out of the gate.
That high a valuation creates risk for investors, as it means expectations will be enormous right away. While the business is certainly growing fast, it's still unprofitable and full of uncertainty. What's worse is that the risk related to buying the IPO may be even higher now.
In recent weeks, there have been significant sell-offs taking place in the tech sector, as lofty expectations weigh on many high-profile companies. The State Street Technology Select Sector SDPR ETF has declined by about 13% over the past month as market apprehension about tech has grown more pronounced.
Anthropic's ability to simply soar in value, and for it to command a high price simply because of a high growth rate or because it makes the popular Claude chatbot, may not be enough. The company's growth rate has been exceptional, coming in at a whopping 1,200% during the first nine months of the year, totaling $33.2 billion. However, with a net loss of $104 billion during that stretch, which includes changes in fair value and non-operating items, investors may be more likely to think twice about the stock now than even a month or two ago, when there wasn't so much of a spotlight on highly valued tech stocks.
Even SpaceX, which surpassed a $2 trillion valuation in its early trading days, has been falling of late to around its IPO price. It's struggled to get back to its early highs, in large part because its valuation is incredibly high and its fundamentals…
Originally published by Google News AI