# Anthropic’s lower operating loss may be an IPO snapshot

Markdown copy of https://realalpha.app/s/anthropics-lower-operating-loss-may-be-an-ipo-snapshot/ on Real Alpha, the best minutes from long interviews with the people building AI. Cite and link the page, not this copy.

- Speaker: [Paul Kedrosky](https://realalpha.app/people/paul-kedrosky/) · Managing Partner, SK Ventures · Invests in science-driven startups and founded HSBC James Capel’s technology equity research practice.
- Host: [Ed Elson](https://realalpha.app/people/ed-elson/)
- Show: Prof G Markets
- Episode: [Anthropic's $800 Billion Problem Is Hiding In The Fine Print](https://realalpha.app/v/ilkjZXwb8dU/), Oct 27, 2026
- Moment: 2:48 to 7:33 of the episode (5 min), playing on https://realalpha.app/s/anthropics-lower-operating-loss-may-be-an-ipo-snapshot/; the episode from there: https://realalpha.app/v/ilkjZXwb8dU/?t=168

## Quote

> “there's a lot of work goes on in terms of **preparing a company's cost** for an IPO.”
> — [Paul Kedrosky](https://realalpha.app/people/paul-kedrosky/) at [5:41](https://realalpha.app/v/ilkjZXwb8dU/?t=341) · Prof G Markets

## Takeaways

1. The $693 million operating loss was below his roughly $1.1 billion expectation.
2. IPO preparation can make reported costs look unusually favorable.
3. Heavy stock compensation means continued dilution and potential buybacks.

## About this segment

Paul Kedrosky says the $693 million operating loss beat his expectations, but IPO cost preparation may flatter the figure. He flags heavy stock compensation as a continuing source of dilution.

From “Anthropic's $800 Billion Problem Is Hiding In The Fine Print”, Oct 27, 2026. [Watch the full episode](https://realalpha.app/v/ilkjZXwb8dU/)

## Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

[3:00](https://realalpha.app/v/ilkjZXwb8dU/?t=180) I'm going to start with an open-ended question, which is, what did you make of this S1? It's finally here. I felt like it was like an MCU, like a Marvel movie, and I'd seen the trailer too many times. And so I'm like, oh God, there's nothing left. It's all been spoiled. So an awful lot of what was in this was in this was pre-leaked, right? So some of it was obviously in a series of Reuters reports, Business Insider.

[3:24](https://realalpha.app/v/ilkjZXwb8dU/?t=204) It's been all over the place. And so I guess the surprising thing for me, for the most part, was how few surprises there were. That for the most part, the major nuggets in terms of, you know, customer concentration, the deceleration in revenue this quarter, which was a little bit masked actually in the filing itself. But nevertheless, you can kind of back it out. um those kinds of things had all been sort of pre-leaked as they say it was like i'd seen the trailer and it was too long so that sort of stuff was there um the other things like customer concentration i had expected a little bit more data on that so like last year i think their two largest customers were something like from the disclosure table i think was 25 percent And this year, they kind of masked out a lot of the names and showed that their largest customer is sitting at around, I think it was 11% or 12%, and then everyone else is kind of masked out, so you don't really know where it stands.

[4:14](https://realalpha.app/v/ilkjZXwb8dU/?t=254) So all we can assume is that customer concentration, it may be that there's 10 companies that are 25%. We just don't know anymore because they're only showing people over 10% share. I think the big question that we were sort of speculating about is how unprofitable will they be? And will they pursue some sort of accounting gymnastics to mask their lack of profitability? And I think that that is an open question, and we will get into that.

[4:42](https://realalpha.app/v/ilkjZXwb8dU/?t=282) But from the outset, when we look at the operating losses, and just to clarify for people, that net loss of $72 billion that is related to the conversion, that is genuinely not relevant because basically what that is accounting for is the fact that they now need to pay back investors because their enterprise value has gotten so large. So actually, the fact that net loss is so big reflects the fact that the valuation has gotten so high. So that's not the thing to focus on. The thing to focus on is the operating loss of nearly $700 million, which I thought was low, or at least narrow, compared to the six months compared to last year, where it was more than $2 billion. That, to me, was a pretty good sign.

[5:32](https://realalpha.app/v/ilkjZXwb8dU/?t=332) I have some pushback to why that might be a good thing that we can get into. But But your reactions just to that number, $693 million in operating losses in the first half of this year? It was narrower than I expected as well. So, again, it's hard to know. I mean, having been on the other side of this, and not to be completely cynical, there's a lot of work goes on in terms of preparing a company's cost for an IPO.

[5:58](https://realalpha.app/v/ilkjZXwb8dU/?t=358) So the thing that they wanted to show, probably show their best face on, was what that operating number looked like. And so that's not particularly surprising that I guess that it was a little better than expected. But nevertheless, like full credit to them that I think this is nowhere near profitable and it's probably going to get worse in future because for a bunch of reasons we can talk about. But the number they presented there was I think I was thinking we'd probably see a number around 1.1 billion on that order of things.

[6:25](https://realalpha.app/v/ilkjZXwb8dU/?t=385) And so we're about 400 million shy in a good way of that number for all kinds of. Reasons they can control. So it's not necessarily something that isn't written as the laws of physics that it has to stay at these levels. But nevertheless, it's slightly narrower than expected. There were other things that I thought were interesting that they did that are, they're not nefarious. They're just things you need to keep an eye on. Like non-cash things like adding back stock-based compensation. That was a material item in there. Anthropic is very, how shall I say, generous in terms of stock-based compensation. And that will probably continue post-IPO. So it's something that investors will have to keep an eye on.

[7:02](https://realalpha.app/v/ilkjZXwb8dU/?t=422) because that's dilutive, obviously. And as a public company, one of the things that the consequences of having such high stock-based compensation is that you have to buy back a lot of stock to avoid dilution of your institutional, well, all investors, but institutional investors in particular. So that item actually is consequential going forward