Retail investors are split on whether to invest in Anthropic’s IPO, with some raising concerns about the tech giant’s finances and sprawling web of billion-dollar deals.
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Retail investors say they’re torn about whether to invest in Anthropic’s IPO.
They raised concerns about the firm’s finances, complex web of deals, and a shakier AI trade.
Sentiment has whipsawed lately, with fears rising about the pace of AI capex and future demand.
On the cusp of a historic IPO from Anthropic , the retail crowd is still mulling whether it makes sense to jump in on day one.
The market has been buzzing about Anthropic’s debut as investors and AI watchers pore over the company’s prospectus. With key details about the its finances available for the first time, retail traders say they’re torn over whether to buy early or wait and see how the stock and the wider AI trade fare following the IPO.
Anthropic’s IPO is different from SpaceX’s blockbuster offering this summer in a way that’s hugely relevant for self-directed investors: as of the S-1 filing, there’s no outsize chunk of stock set aside for retail, unlike SpaceX, which set aside 20%.
That might be why investors who spoke with Business Insider are feeling cooler about the offering, though their hesitation can also be chalked up to recent c oncerns about AI that have roiled some of the hottest stocks in the last few weeks.
Some investors say they aren’t deterred by a potential stock drop, while others plan to stay away from the stock altogether as they hold out for more clarity about Anthropic’s finances and its business outlook .
Walid Diab, a consultant and investor based in the United Arab Emirates, is among those who said he’s looking to put a large amount of cash in Anthropic. He told Business Insider he plans to invest around $30,000 to $50,000 in the AI giant, hoping to ride a wave of forced-buying higher as passive funds, which track indexes like the Nasdaq, purchase shares of the company. But he plans to sell most of the shares not long after, hoping to make a speedy exit when he senses the hype is about to fade.
Walid Diab, an investor based in the UAE, says he’ll be participating in Anthropic’s IPO by making a tactical short-term trade.
Courtesy of Walid Diab
Diab made a similar move with SpaceX’s IPO , and sees a handful of reasons that Anthropic isn’t a long term investment for him. For one, the company choosing to go public now looks like a “calculated window-of-opportunity play,” he said, pointing to how AI firms face regulatory pushback next year if the midterms shift the balance of power in Washington.
Anthropic’s costs are also high, and are being pressured by energy inflation stemming from the Iran war, he said. The company said it spent around $9 billion on computing and infrastructure costs in the first half of this year, and outlined the risks that elevated energy costs could impact its financial results.
Anthropic’s total addressable market was reportedly estimated to be over $30 trillion, but Diab said that may be “wildly optimistic.”
“Tactical short-term entry, long-term wait-and-see,” he said, adding that he was ready to drop shares quickly if he saw its valuation decouple from its underlying fundamentals. “I will probably sell 70%+ of my holdings of Anthropic.”
Anthropic flagged risks like higher energy costs and its large multiyear commitments to investors in its S-1 prospectus.
Kevin Dietsch/Getty Images
Raj Dass, a trader and wealth manager based in South Africa, said he was looking to avoid Anthropic’s IPO altogether, despite remaining interested in the company overall. While the company’s revenue figures have been “exceptional” and the firm appears to have a large competitive moat, Dass says he’s concerned about long-term compute commitments, with the company committing over $800 billion to its computing contracts, per its S-1 filing.
Anthropic also flagged the risk of fluctuating profit margins and revenue growth to investors, pointing to how its multiyear commitments could weigh on its financials over the short term. About half of Anthropic’s revenue is generated through its cloud partnerships , Dass added, pointing to the risk stemming from those agreements in particular.
“It is early days to judge that,” he said of Anthropic’s competition and its business outlook.
The ambivalence some investors are feeling has partly to do with the extreme whiplash in the AI trade recently. The market has juggled a handful of fears and successes in recent months, with bearish and bullish sentiment flip-flopping on a weekly basis in some cases. Sentiment has shifted from fears that AI could destroy humanity to enthusiasm for AI agents and then back to worries that AI is a systemic risk to markets and the economy.
In prediction markets, bettors are pricing in a range of possibilities for the Anthropic once it goes public. On Polymarket, people are wagering both on the company’s explosive growth as well as the possibility that the company will eventually fail, with the market pricing in a 21% chance that Anthropic could declare bankruptcy by the end of the decade.
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Prashant Mishra, a retail investor based in the UK, said he’s in it for the long haul, and he and his wife were both planning to submit an application to their brokerage to participate in the IPO. If approved, the couple plans to invest at least $1,000 each, with Mishra looking to hold onto his shares for at least a few years.
Prashant Mishra, an investor based in the UK, said even a stock crash wouldn’t be enough for him to sell his Anthropic shares.
Courtesy of Prashant Mishra
Mishra said he was a believer in revolutionary powers of AI. Even if Anthropic’s stock were to plunge shortly after the IPO, it wouldn’t be enough to force him to sell, he said.
“I believe in the saying of Warren Buffett that you have not lost it until the time you have sold it,” he said, referring to a supposed quote from Warren Buffett during the 2008 crisis that’s become a meme in online investing circles: “I didn’t lose anything. I didn’t sell.”
Mishra said he only has only minor concerns about Anthropic’s business. The company, like others in the AI space, is reckoning with higher borrowing costs and is firmly embedded in Nvidia’s circular web of AI deals , which has some market pros concerned about the contagion risk if one part of the web were to fail.
“Can they make it cheaper going forward with the massive investment in data centers?” he said of the various risk scenarios he was juggling. “It is expensive. So if it is not generating enough value, then of course it will crash.”
Read the original article on Business Insider
