> Securities > Anthropic PBC (ANT)
Anthropic PBC (ANT) |
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| The Anthropic S-1 dropped several days ago. Sources suggest the frontier AI model laboratory has begun the roadshow in advance of pricing for their upcoming IPO. The firm is asking for $90.4 billion at a valuation of $1.0 to $1.4 trillion dollars, putting it in the running for the largest IPO in history. This is down from earlier expectations of $1.5 to 2 trillion following the steep selloff in tech stocks over the last several weeks. I believe it is still too high an ask... It's hard to conceptualize a number like $1 trillion. For point of reference there are something like 340 million humans living in the United States. For Americans to come up with $1 trillion in cash, on average every man, woman, and child would need to contribute $2,941.18. It's a big number. It's worth asking what the company is offering in exchange. According to the revised/updated S-1 at the time of this writing, the firm is reporting that in the first 9 months of this year (ending September 30, 2026) it generated revenue of $33.24 billion. Despite this revenue it generated an operating loss of $1.26 billion. Using Generally Accepted Accounting Principles (GAAP) it reported $154.3 billion in total assets, including $98 billion of cash. Liabilities stood at $146.7 billion, leaving equity of $7.6 billion. If the company were liquidated today that $7.6 billion is what the people being asked to value this company at $1+ trillion would be left with... in theory. In reality, they would get nothing because Anthropic PBC owes much more than they are reporting on their GAAP compliant balance sheet. Buried in the footnotes they have disclosed $313.8 billion in non-concealable purchase commitments for things like GPU's from Nvidia, $4.7 billion in guarantees that backstop partner firm's financing commitments, and $451.2 billion in future lease obligations to companies like Alphabet and Amazon.com for data center facilities. That's a total of $769.7 billion in off-balance-sheet liabilities that would also need to be paid before shareholders receive anything from the liquidation of this entity. Who does Anthropic owe this money to? The company has signed commitments to pay at least: $161.2 billion to Broadcom $120.5 billion to SpaceX $114.5 billion to Alphabet $110 billion to Amazon.com $44.9 billion to Microsoft $44.6 billion to NScale Global $41.3 billion to Lambda $20 billion to AMD Now, in fairness, Anthropic isn't being liquidated today. AI is a revolutionary technology and revenues generated by the firm are growing quickly. Publicly traded stocks are valued based on future cash flows. Arguments can be made that the company could earn enough in the future to meet all these obligations and more. Those arguments aren't particularly good or even coherent, but people are making them. Without exaggeration, in my opinion, this is literally the single worst investment opportunity I've seen in 20+ years of market experience. Worse than WeWork. Worse than SpaceX. SpaceX was and is offensively overpriced, but it came to market with a moat and an expansion of the possible. Anthropic offers neither. There are at least a dozen companies offering competitive products and we've yet to talk about the quality of that $33 billion in year-to-date total revenue... Sources suggest that only $64.4 of the $90.4 billion ask will be issued to the public via the IPO. The remaining $26 billion will be contributed by Alphabet (GOOG), Nvidia (NVDA), AMD, Broadcom (AVGO), Micron (MU), Microsoft (MSFT), and TSMC as part of a Series N private round set to occur in conjunction with the IPO. This is in addition to the substantial investments already made by these firms including: AMD $5 billion on July 22, 2026 Amazon $25 billion on April 21, 2026 Google $40 billion on April 24, 2026 Microsoft $5 billion on Nov. 18, 2025 Nvidia $10 billion on Nov. 18, 2025 Why are these companies, some of whom are direct competitors, investing in the Anthropic IPO? Because none of this is real. Anthropic doesn't have $33 billion of customer demand in the traditional unaffiliated end-user sense. A majority of its revenue comes from its investors, who are passing money around in a complicated financial engineering scheme to make it appear as though customer demand exists, in an effort to defraud capital markets investors. Those 7 companies listed above are acquiring 29% of the IPO because they need to keep the "profits" Anthropic is going to produce inside their circle. At this point you're probably wondering how this scheme works. Well, see, after the IPO is completed, the vast quantity of shares these circle participant firms already own will get marked up to the new publicly traded valuation. All of them will report massive profits to their shareholders as a result. Then those firms will pledge the higher valuation shares as collateral for loans and use the proceeds to invest in a new crop of private market companies sponsored by their affiliated venture capital firms. Those new private companies will use the proceeds to buy ads, and tokens, and data center equipment from circle participants like Anthropic, and everyone will be able to report impressive revenue growth and profit numbers in the quarters ahead... just as they have been doing for the prior several years. The financial press, who have long been captives of these firms, will continue reporting on the impressive nature of the totally fabricated financial statements, and all the schmucks who invest in index funds will be forced to plow ever more of their retirement funds into the scheme. In it's Q2 earnings report Alphabet reported $112 billion of net income, $97 billion of which came in the form of "Other Income" generated from its pre-IPO investments in SpaceX, which came to market that quarter. Eighty-seven percent of Alphabets Q2 earnings were gains on equity investments. Napkin math suggests they will report another $40+ billion of such profits in the current quarter should the Anthropic IPO occur as currently expected. Hyperscaling is a closed system of circular financing and financial statement engineering designed to extract cash from capital markets. That is the whole game. In many ways this is a gloriously impressive bit of financial engineering. It is both GAAP compliant and legally permissible thanks to the firms meticulous adherence to disclosure requirements. And it has been working for years. So many insiders have become fabulously wealthy that it's easy to forget that this IS actually a scam. And like all scams, it cannot run forever. I honestly do not believe it can run for another year. The scheme only works because these companies stash liabilities in off balance sheet vehicles, allowing them to book profits on the products and services sold elsewhere in the circle, and borrow based on shareholder equity that wouldn't exist if the liabilities were on their balance sheet. The off balance sheet liabilities associated with circle constituents now exceed $5 trillion... exceeding the totality of reported shareholder equity... and are now growing by hundreds of billions of dollars per quarter. Cash flows at these firms in aggregate are negative. The scale of borrowing to fund the continuation of the scheme has nearly tapped out the bond market. Yields are rising. If these companies cannot siphon trillions more from investors over the next year, the growth stops. Investors bail. The market crashes, and everything disappears. Needless to say I will NOT be participating in Anthropic PBC's IPO. I do not hold a position in any of the firms discussed here. I'm not telling anyone what they should or should not do. I'm not a financial advisor. I've said the things I have because I love the market and believe asset prices should reflect something approximating true value. As far as I'm concerned the valuation of these firms do not. If anyone would like to refute the assertions made, the floor is open. I won't be holding my breath. |
