AI Giant Anthropic Eyes $2T IPO: Is It Too Hot to Handle?

Anthropic, the creator of the Claude large language model, is reportedly gearing up for its initial public offering (IPO) as early as late October, aiming for a valuation around $2 trillion. This move could potentially eclipse the record set by SpaceX's IPO. The company confidentially filed its IPO prospectus with the Securities and Exchange Commission on June 1. Initial reports suggested a filing after Labor Day, but sources now indicate a late September release for the S-1 registration statement, allowing for an investor roadshow in mid-October.

The excitement surrounding Anthropic's potential IPO is fueled by its extraordinary growth. As of July, the company's annual run rate revenue had soared to $65 billion, a significant increase from $9 billion at the start of the year. Its agentic coding tool, Claude Code, also demonstrated strong performance, reaching $2.5 billion in annualized recurring revenue by early May.

Despite this impressive financial trajectory, historical performance of hyped tech IPOs suggests a cautionary approach for retail investors. A recent analysis of 30 prominent tech IPOs since Facebook's debut in May 2012 revealed that while many initially outperformed, a majority experienced significant drawdowns within their first year, averaging 55%. Eleven of these IPOs saw losses between 64% and 90% from their year-one highs. SpaceX itself experienced a 54% drop from its peak shortly after its debut.

This pattern of rapid gains followed by substantial declines is often attributed to the fleeting nature of retail investor enthusiasm for IPOs. While inclusion in major stock indices could provide initial support, an extremely high valuation, like the one Anthropic is targeting, may eventually become a burden for its stock price. Therefore, historical data indicates that chasing the hottest tech IPOs has rarely proven successful for individual investors.