Anthropic's growth could support its reported $2 trillion valuation

Transcript

From the transcript How I Invest publishes with the episode.

1. 32:56

   unfiltered unfiltered opinion, but let's assume that goes public at reported $2,000,000,000,000. I don't have any insider information on that. How do you think about the valuation, and what will be the drivers on whether that's overvalued or undervalued? I think the valuation based on the reported revenue numbers and revenue growth is actually reasonable. You know, these are unprecedented. Is that just because the sticker shock on $2,000,000,000,000 is just so great they had to price it like that?

2. 33:31

   To be clear, there is sticker shock about 2,000,000,000,000. But I think if you look at the underlying business momentum, other than the sticker shock of that being a kind of an unprecedented number, It's actually reasonable. Like if you took three zeros off of all the numbers, you would say, well, actually, that makes sense. If that growth rate can continue or anything like it can continue, they will grow into and through that valuation in a very reasonable period of time.

3. 33:59

   So I don't think it's unreasonable at all. You know, we have a hard time as investors pricing companies that are in hyper growth because it's really hard to do any kind of forward. Goes back to where we were talking before. Correct. Seems overvalued. It might see overvalued at a moment. But again, if hypergrowth continues, it'll quickly seem undervalued. So I think we just you know, we just don't know.

4. 34:20

   And so I don't think it's unreasonable. And I am sure there's demand. I think what will be interesting to see technically is how much of the cap table is in strong hands versus weak hands. And therefore, what the supply demand picture looks like when the lockups start to come unlocked. You know, SpaceX has done well so far. But I just don't know enough about the detail of the anthropic cap table to know how many, you know, venture firms and other investors who haven't produced a lot of liquidity in the last, you know, five years are really eager to produce some liquidity.

5. 35:00

   Another set of incentives. And as a small shareholder, not not so small outcome, I I could see if you invested 50,000,000 or a 100,000,000, that number is very difficult to walk away from even if you think it's undervalued. Yeah. I think that... And you're the LP and you're sort of saying, alright. It's a lot of TVPI, but we haven't had distributions from this asset class. So let's get going with this.

6. 35:25

   And this is how this works. You give us money back and we give it back to you, but you need to give it back. So again, that doesn't make me pessimistic. I just don't know the math around this week. It's more of a short term volatility. Correct. But these things can have a... Actually, I'd say medium term effect if you have a cap table full of weekends that need liquidity, particularly when the numbers get that big.

7. 35:48

   Because how do you replace, you know, in a theoretical, say you had half of the company were liquidity seeking owners in a period of two years, you know, between IPO and two years after IPO. That means you got to go. If the stock stays flat, you got to go source another trillion dollars of liquidity. That's not just a valuation question. That's just a like cash. Where's that coming from? Probably not coming from T bills.

8. 36:14

   So it's coming from somewhere. So there's some like physics of the market that but by the way, that 50% was like total speculation. I'm I have no no intuition that half the cap table is a seller in the first two years. But, you know, we're an unprecedented territory, and so we just don't... We don't really know.