The anticipated initial public offering of Anthropic is likely to test investors’ ability to value a high-growth artificial intelligence company with substantial revenues but steep losses and uncertain cash flows, according to valuation expert Aswath Damodaran.
Anthropic is expected to begin marketing its shares during the week of November 9, according to sources. The timeline points to a public filing in the last week of October and a listing around mid-November, although the dates and plans could change depending on market conditions.
The company had confidentially submitted a draft registration statement to the US Securities and Exchange Commission (SEC) in June. Companies that follow this route are required to make their registration documents public at least 15 calendar days before the formal investor roadshow begins.
The proposed listing comes as Anthropic reports substantial revenue alongside significant losses. The Wall Street Journal reported that the company generated $16.3 billion in revenue in the first six months of 2026, while recording a net loss of more than $80 billion over the same period.
Last week, Anthropic told investors at its San Francisco office that third-quarter revenue had risen to $16.8 billion from $11.5 billion in the second quarter, according to the Financial Times. The company also said it was profitable on an adjusted basis. The difference between its reported net loss and adjusted profitability is likely to be an important consideration for investors assessing the company’s financial performance ahead of its IPO.
What does Aswath Damodaran say about Anthropic's valuation?
In a post on X, Damodaran said investors should remember that IPOs are priced using metrics that can reflect the prevailing market enthusiasm, particularly when a company is young, growing rapidly and reporting substantial losses.
“As Anthropic's IPO nears its target date, it it worth remembering that IPOs get priced, and that as a young company with growing revenues and big losses, that pricing will be based on metrics that are buzzy and unfamiliar, from eyeballs in the dotcom era to users in the social media decade to ARR with AI companies,” he wrote.
Damodaran explained that his approach begins with the corporate life cycle and how a company's financial metrics evolve as it matures.
“To understand why, I start with the corporate life cycle assessing how corporate metrics (revenue growth, earnings, margins, cashflows) evolve as companies age, and why desperation drives pricing up the income statement (to revenues) and sometimes beyond (eyeballs, users) at young companies,” he said.
Why are Anthropic and OpenAI difficult to value?
Damodaran described Anthropic and OpenAI as young companies with high revenue growth, albeit at scale, and business models that remain in flux. He pointed to their large operating losses and even larger negative cash flows, highlighting compute costs as a continuing drain on cash through reinvestment.
The challenge, according to Damodaran, is that valuing these companies requires assumptions about their future business prospects, including the size of the markets they could serve, the profit margins they could eventually achieve and the reinvestment needed to sustain their growth.
“You can value these companies, but it will require making judgments about total market size, profit margins over time and reinvestment, with little historical or cross sectional data to base them on. That uncertainty will dissuade many from even trying,” he wrote.
Why venture capital valuations may not tell the full story
Damodaran also cautioned investors against relying on venture capital assessments simply because private investors may have greater access to company management and information.
“If you are tempted to go with venture capital assessments, on the assumption that VCs know more than you do and have access to the company's management, the VC pricing of Anthropic and OpenAI has little informational value since it reflects expectations of an IPO pricing, adjusted for downside,” he said.
His argument is that venture capital valuations of Anthropic and OpenAI may already reflect expectations of their eventual IPO pricing, adjusted for downside risk. As a result, these assessments may offer limited independent information to investors attempting to determine the companies’ value ahead of a public listing.
Disclosure: This article has been written by Kumar Gaurav, who is not a Sebi-registered Research Analyst or an Investment Adviser. Gaurav and their ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective Sebi-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here