Anthropic IPO strategy suggests focus on long-term value over near-term exit

Initial public offerings fall into two distinct categories.

The most prominent IPOs in the current period have served as cash-out events, used by venture capital firms to inflate valuations and exit via retail liquidity. CNBC contributes to this cycle with its blanket coverage of such offerings, which have historically lost money for the individual traders they promoted most heavily.

The opposite consists of companies crafting a long-term shareholder base, where the pricing is not overly aggressive and the fundraising is restrained.

Anthropic appears to belong to the latter group. Reports indicate the company has received bids matching the $60 billion size of the offering. The exact price remains undisclosed but could rise nearer to the event. Even so, the firm does not seem to be pushing for a peak valuation. Earlier in the year, a $2 trillion valuation was put forward; currently the range appears to be $1.25 to $1.75 trillion.

It is a large sum requiring considerable assumptions, yet the valuation adjustments do not suggest an offering to steer clear of.

The Financial Times reports Goldman Sachs, acting as lead bank, is projecting revenue of roughly $52 billion for Anthropic this year, climbing from $4.6 billion in 2025. A more-than-tenfold increase is generally well-received.

The forecast continues to $136 billion in 2027, $442 billion in 2029, and over $600 billion in 2030.

To put this in perspective, only Amazon and Walmart in the S&P 500 currently exceed $600 billion in revenue, both just above $700 billion. Apple stands at $416 billion. Goldman's projections mean a business established less than six years ago would become America's third-largest company by sales within four years.

On these numbers, the valuation ratios shift rapidly. At $1.25 to $1.75 trillion, the price-to-revenue multiple is 24 to 34 times this year's figure, a high level. On the 2027 projection, it falls to 9 to 13 times. By 2030, it would be 2 to 3 times, which is lower than the current S&P 500 average. The author expresses strong skepticism but notes that such caution has not been rewarded in the AI boom.

There is also a catch, and a significant one at that. Goldman forecasts Anthropic will not turn free cash flow positive until 2030, when it will generate $33.6 billion. That margin is under 6% on $600 billion in sales, placing the IPO at 37 to 52 times a free cash flow level four years in the future. Meanwhile, the company has committed roughly $900 billion to computing capacity, making the $60 billion raise a negligible fraction of that expenditure.

It is worth considering the source of these projections. The bank pitching the deal is the one presenting them to a potential buyer. Revenue must expand 160% in the coming year and then continue compounding at 80% annually through 2029 simply to meet the outlined forecasts.

This scenario does not inspire the author's enthusiasm, and they will not consider purchasing the initial allocation. Nevertheless, for the wider market, signs point toward a successful flotation.