Comment by runako
1 day ago
Fair, I misread the filing.
Larger point stands. SpaceX is commanding a 62x sales multiple, whether or not you personally believe price:sales should be relevant. SpaceX's AI operation is smaller and growing slower than Anthropic's. It's reasonable to expect investors to benchmark Anthropic against SpaceX, it would be silly not to do so. A normal thing one would expect investors to do is assign a higher multiple to a company that grows faster.
But the question is not so much if they can IPO at those prices but rather if the valuations are sustainable over a couple of years. If they are priced to perfection there isn't much left for public investors besides huge risk that something might not work out 100% as expected.
I mean, yes. You are raising points, using Wall Street lingo, that are rightfully raised about every IPO, ever.
To be clear: I do not have a financial interest in this, and will not be buying the IPO. I very much am just describing the world as it is.
Well not exactly. It's quite different this time since most other tech companies used to IPO way earlier. So their valuations weren't based on everyone assuming that they will continue growing exponentially, corner the entire market and effectively become monopolies. You used to have much more uncertainty and therefore potential upside for investors. I mean Anthropic can do great by the standards of pretty much every other public company and still catastrophically underperform the current expectations.
Larger point doesn't stand, price/sales is as useful of a metric like measuring speed as mass/distance. "Yes, my speed is 100kg/10 meters".
Some people will benchmark Anthropic vs. SpaceX, that doesn't make it a smart approach.
A normal thing is to consider risk, liabilities, cashflow, how diversified revenue streams are etc., and other things which you seem to be missing.
I'm not trying to dissuade you from buying it. I'm just saying that the reasons you give are wrong.
> Some people will benchmark Anthropic vs. SpaceX, that doesn't make it a smart approach.
Yeah, I would not pay 62x sales for SpaceX. And I don't buy IPOs. I'm not endorsing these values, I am saying benchmarking against peers is what investors commonly do.
> A normal thing is to consider risk, liabilities, cashflow, how diversified revenue streams are etc., and other things which you seem to be missing.
I'm not missing those things, I am not including them here because being "right" is rarely how markets value companies. (Also because the rest of that stuff is in the S-1.)
It's possible to build a "correct" model of a high-growth high-tech company that looks primarily at risk, liabilities, cashflow, and diversity of revenue streams. That model might put Anthropic at (say) a $100B valuation. That "correct" model is going to be less predictive than a model that starts from what similar firms are trading at in public markets. I personally am more interested in predictive power than correctness when evaluating stocks.
> I am saying benchmarking against peers is what investors commonly do.
You are benchmarking against an outlier stock with a cult following (Elon Musk) and diversified sources of revenue. Anthropic does not have either.
If it was as easy as comparing the hottest new IPO with Elon's companies and applying the same multiples, people wouldn't have lost so much money on electric car IPOs that pretended to be Tesla (see PSNY -99.5%; NKLA -99.99%; FSRNQ -99.99%; etc.).
> being "right" is rarely how markets value companies.
Conventional metrics are how most stocks are valued most of the time. What you want to say is that market can be exuberant sometimes. That's fair. When the exuberance goes away, valuations come back to earth (see PSNY -99.5%; NKLA -99.99%; FSRNQ -99.99%; etc.).
> That "correct" model is going to be less predictive than a model that starts from what similar firms are trading at in public markets.
Even if we take your statement at face value, you're still not doing it right. A valuation based on comparisons has to have more than 1 peer to compare against. Check out the multiples of other model providers listed on the stock market. You'll probably be shocked that it's not a double digit multiple of revenue.
And then, if you really want to have a proper model, isolate the AI revenues of SpaceX and other hyperscalers, then we can argue that you have a model worth something.
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