OpenAI & Anthropic Set Stage for "More Bullish" IPOs Following SPCX Debut

Nicole Pedoli (0:00)

Welcome back to The Watch List. I'm Nicole Pedoli. These time now for our panel, digging into the IPO prospects, the timelines that we could anticipate for both Anthropic and OpenAI. Joining me for this conversation, John Jannarone, Editor-in-Chief, IPO Edge, Willy Lee, Principal at NeoSteller. It's great to see you both. John, some of your thoughts. Of course, this has been somewhat of a landmark year for IPOs, we've had some big ones, and looking forward to more. Anthropic is probably coming sooner than OpenAI, I presume. What are some of your thoughts on some of these big names?

John Jannarone (0:34)

Well, thanks. Hi, Nicole. Always great to be back here on your show. You're right. All eyes are on Anthropic right now.

The only obvious comp is staring right at us, of course, SpaceX, which is trading pretty well. It's trading at about $155 around there. Remember, at price $135, open at $150.

Considering the size of that deal, that was a success and I think it cleared the way for Anthropic to go. Now, Anthropic is going to be bigger. Anthropic, we're looking from what I'm hearing from private market investors who own it. Now, $2 trillion valuation, a little bit more than 1.7 on Anthropic.

My co-panelists here can probably talk more about the fundamentals, but this thing is going like gangbusters. A couple of weeks ago, the company comes out and says the total addressable market is $30 trillion. By the way, US GDP is $32 trillion. Those numbers are unheard of. It's gigantic, doing really well. If I can just slip in one more thought here, Nicole, Anthropic does not trade very much privately. The reason for that is Anthropic doesn't want it to. If you try to sell your shares to someone else who Anthropic does not want to own them, there's a chance Anthropic will cancel your shares and render them worthless. For that reason, there's a lot of institutional money out there trying to get into Anthropic and it cannot, so it's going to have to wait for the IPO. That could actually drive a lot of demand for the IPO process.

Nicole Pedoli (1:57)

I saw in your notes that you talked about Anthropic also seeking investment grade debt rating despite some of the metrics like negative operating cash flow.

I thought that was interesting. Let's continue our conversation. Willy, what are some of your thoughts on Anthropic and OpenAI?

Willy Lee (2:15)

Look, I think the Anthropic IPO is extremely exciting. Neo Stellar is an investor in OpenAI.

I think for us, we're really just excited to see how it prices, I think, where it's going to go. I think there's some people that are talking about whether or not the Anthropic IPO is a referendum on AI demand. I think where it's pricing $2 trillion or above, I think what's very clear is the AI demand is there. Whether that's in Anthropic, in OpenAI, Open Source, there is a clear demand for AI capabilities. And I think the conversation of whether or not people are seeking AI or AI productivity is over. I think it's here. It's just a matter of who's going to be the beneficiary.

Nicole Pedoli (3:02)

And when we think about the IPO of Anthropic, you said it should not be framed as a referendum on whether demand exists. What does that mean? Explain that to me, Willy.

Willy Lee (3:13)

Look, yeah, I think what I really mean is, when you see the amount of capital that's gone into the IPO markets, over 145 billion this year, or if you look at the money that's gone into the hyperscalers, Meta and Oracle, over 250 billion there, investors are already putting capital towards AI infrastructure. And guess who the main buyers in the backlog of these hyperscalers are? It's OpenAI and Anthropic. So investors are already putting in money, whether they are intentionally doing it or not, they're putting in money into AI infrastructure that's supporting these companies. And so you're taking bets that this demand is going to continue.

Nicole Pedoli (3:56)

We saw a lot of demand and appetite for SpaceX. And John, you said that you expect even more for Anthropic. You have even some numbers that you care to share.

John Jannarone (4:10)

I do, I do, Nicole. So I was just on the phone with someone who's on the hunt for shares of Anthropic. That's where I gleaned the information I just shared. What he said was that, you know, I think that depending on how you do the math, we're talking about four times over subscription on SpaceX. We're talking 6X, maybe 8X could be the numbers. Now, of course, this is a little speculative. The S1 has not come out yet. But what I'm hearing is that anyone who has a chance to buy those shares will take them because they're so, so hard to find. Nicole, if I can just go back to what we were talking about, these hyperscalers for a moment. When these hyperscalers are financing these deals to help the likes of OpenAI and Anthropic out, what you're seeing there is a little bit cozy and possibly concerning. I mean, you hear this talk about it being circular.