Anthropic’s (ANT) initial public offering is already assured to be one of the biggest—if not the biggest—in history. And apparently, the maker of Claude wants everyday investors to have a fair shot at buying the stock when it goes public next week.
In an updated regulatory filing on Nov. 10, Anthropic disclosed plans to allocate as much as 20% of its IPO to retail investors. That's an unusually large allocation for individual investors, who often have difficulty getting shares at an IPO's offering price.
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But that also doesn’t necessarily make it a good idea. And if you wonder why that’s the case, you should see what the company’s own Claude AI assistant told me.
Yes, I Asked Claude About the Anthropic AI
To be clear, I’m already on the record as saying that even if you think Anthropic will be a great investment, there’s no need to jump into the stock on day one. IPO stocks are notoriously volatile because there’s a ton of enthusiasm that quickly wanes.
But I thought it would be fun to go directly to the source, so I opened up my personal Claude account and entered this prompt: “Based on your knowledge of how IPOs work, and how IPO stocks tend to move in the first few days of trading, do you think retail investors should buy Anthropic stock as quickly as they can when trading opens?”
The response back was long, as is typical with AI assistants, so I asked Claude to distill the advice down to 50 words or less so I can share it here. It said:
“Anthropic makes me, so I’m biased, and I’m not a financial advisor. Historically, retail buyers at an IPO’s open often pay post-pop prices, and hyped IPOs tend to underperform. If you want ANT, consider waiting for volatility to settle, using limit orders, and investing only what you can lose.”
That advice makes a lot of sense to me. And there’s history to back it up.
Facebook and SpaceX did the same thing
Do you remember when Meta Platforms (META) went public (then known as Facebook) more than a decade ago? Trading opened at $38 on May 17, 2012, but by June 5, the stock was down to $25.87, losing roughly a third of its value. And by early September, it was trading at less than $18. The chart below shows those first few rocky months of Facebook stock.
www.barchart.com Of course, today Meta Platforms is one of the biggest companies in the world and a tremendously superb investment. But you probably lost money those first few weeks if you bought the stock at the IPO—and you could have made a lot more had you waited a few weeks.
Then there’s SpaceX (SPCX), which was a massive event when it had its record-setting IPO in June. The IPO was priced at $135, and trading began at $150 on the first day. By the third day of trading, shares were over $200. But then the bubble popped, and shares today are still below $150.
www.barchart.com A Similarity Between SpaceX and Anthropic
Anthropic already appears to be following SpaceX’s lead in one respect. Usually, a company makes 5% to 10% of its shares available to retail investors at the IPO. SpaceX was unusual in that individual investors received approximately 20% of the offering, according to The Wall Street Journal.
In Anthropic’s updated regulatory filing, it announced it plans to sell 825 million shares of Class A common stock in its IPO, with an expected offering price between $70 and $78 per share. That would make the public offering worth as much as $64.35 billion at the top of the range. The company said it expects retail investors in the U.S. and other countries to receive up to 20% of those shares, although the final allocation will depend on demand.
At the midpoint price of $74, that could put approximately $12.2 billion worth of shares into the hands of individual investors, who are expected to be able to buy Anthropic shares under the ticker ANT on the Nasdaq on Nov. 19.
Anthropic Has Extraordinary Growth—and Extraordinary Expenses
Anthropic's Claude AI models have become a major business in a remarkably short period.
Revenue in the third quarter was $17 billion, more than 12 times what it generated a year earlier. It also reported that more than 11,900 customers are spending at least $100,000 annually, measured on a trailing-12-month basis.
But Anthropic's financial commitments are just as remarkable as its revenue growth. The filing disclosed approximately $900.9 billion in committed spending, substantially all related to computing infrastructure. About $451.6 billion is expected to be incurred before the end of 2030, with most of the remainder stretching through 2045.
That's an enormous amount of money, even for a company growing as quickly as Anthropic.
The company is betting that demand for its AI models will continue expanding enough to justify those investments. Investors buying into the IPO are making a similar bet, although they won't necessarily know how quickly that spending will translate into sustainable profits.
Why I’d Be Careful About Buying ANT Immediately
Anthropic has an outstanding growth story, and the opportunity to participate directly in its IPO will undoubtedly appeal to many retail investors. I expect the stock to rise quickly for a few days—and then I expect an inevitable drop.
I still haven’t decided if I’m buying ANT stock. But if I do, it will be several weeks down the road to let the volatility in stock price settle.
In this, I think Claude is giving pretty sound advice.
On the date of publication, Patrick Sanders did not directly have a position in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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