Anthropic AI Valuation Plunges on Slowing Revenue Growth - IPO Only With $1.5 Trillion

Eli the Computer Guy (0:00)

Uh-oh, uh-oh, uh-oh. Coming from Reuters. Investors temper Anthropic IPO valuation expectations over revenue growth slowdown. Sources say. That's right, the investors are looking at Anthropic's IPO, and they're saying, two trillion just seems like an absolutely stupid number. We're not willing to pay any more than 1.5 trillion for this idiocy.

So yes, this is what happens when the over 10 window hits the technology world. I do think this might actually be smart from Dario's perspective or Anthropic's perspective, is you throw out a valuation so batshit fucking stupid, that when investors come back and they want to feel like they're smart, you know, they chop down that number by a quarter, and then you just get a bat crap ridiculous valuation. Like, oh, oh yeah, two trillion dollars. That is just idiotic. I'm not gonna value your company for any more than 1.5 trillion dollars.

So you take that value, oh, I guess we'll have to take that valuation. Anyways, I do think this is kind of an interesting story because it does show you that at the end of the day, all of these valuations are simply investors pulling numbers out of their ass. And that is why I do get concerned about this AI bubble because the numbers have gotten so idiotically stupid at this point in time, that basically when investors are able to take a beep, when they're able to take a breath, when they just get exhausted, right? When the adrenaline rush from FOMO just simply overloads their systems and they have to go take a sleep for a little while, I think they're gonna wake up in the morning and go, Oh, wait a minute, why did we think this crap was worth trillions and trillions of dollars?

Maybe it's only worth a few hundred billion dollars or whatever else. And the issue is, is basically what happens when people decide that the valuation of these companies is just way too damn high, and so the valuations start getting cut. And what happens past that point in time? Again, it's important to understand, like the housing market is a perfect example of this when we think about valuations, right? Like, when you look at a house, why is a house valued what it's at? A house can be valued to $200,000, then the price of it can jump to $800,000, then the price of it can drop down to $400,000. It's the same house, basically the same location, not a lot around it has changed. It's just people's viewpoint on what the price of that house should be. That is what can fluctuate massively. What's interesting with so many of these AI companies is it seems like they are addicted, truly addicted to these massive valuations. So, if the valuations get scaled back, what should just be normal business, just normal investor, whatever, I do wonder if it will be an existential crisis for these businesses themselves, for these startups themselves.

Some current anthropic investors and prospective investors in its upcoming IPO are weighing a lower valuation for the AI company after its latest financial disclosures, for people familiar with the matter said, amid broader concerns over the ballooning cost of financing AI. Some investors who attended Anthropics Investor Day on Wednesday in San Francisco discussed a valuation of around $1.5 trillion, through the people said, a significant step down from the roughly $2 trillion valuation that investors had previously expected for the November share sale. At Wednesday's meeting, Anthropics told prospective IPO investors that its third-quarter revenue jumped 45% to $16.8 billion from the previous quarter, and that it was profitable on an injustice basis during the quarter. So it's profitable before the bad stuff.

I think that is the new term for the AI dip crappery currently going on, is when they talk about the profit before all the things that they don't want to talk about.

Here's all the profit that we had. If you ignore all of these real expenses that had to get paid out, that we just simply want to ignore. That seems to be what's going on. And so they're trying to say they're profitable.

Well, those numbers assuaged some concerns about the massive cost of developing AI systems. Some investors were disappointed by the slow and sequential rate in the latest quarter, as Anthropix revenue more than doubled from the first quarter to 11.6 billion in the second quarter that people added. And so this is where things like valuation get so ugly. So think about this, right? So basically, they were at, so in the first quarter, they were at slightly less than $6 billion. So $6 billion in revenue for the first quarter. So by the third quarter, they're up to $16.8 billion, right? So in two quarters, they've increased revenue per quarter by $10 billion, right? In any sane world, that should be considered a good thing. The issue, the issue for the investors, though, is the investors saw like around that $6 billion in revenue in the first quarter, and then they saw that basically double to $11.6 billion in the second quarter. So what they're looking for, what their expectations are, and if it should double again, so it should be up to $23 billion. And this is where I say, with so much of the stuff, with the valuation world, it's all based off of your perspective from where you're sitting at. So I would think $16 billion would be a good thing. But if your expectation is that it should be $23 billion, then $16 billion is too low. And the issue is, all of these investors are putting money on the table based off of, again, it's vibe investing.