Exploring Anthropic’s IPO Strategy: Insights from the SpaceX Model and Its Implications for Investors

When AI company Anthropic begins trading after its anticipated IPO next week, its share price in the initial weeks may hinge on the requirements of institutional buyers as much as on the interest of individual investors. The company plans to raise up to $64.4 billion by selling 825 million shares priced between $70 and $78 each, potentially valuing Anthropic at up to $1.4 trillion. Investors are looking to SpaceX’s recent public offering for insights, as its listing altered the dynamics for large IPOs by facilitating rapid inclusion in major stock market indexes.

Index Inclusion Drives Demand

Index providers track groups of stocks that represent specific markets. Passive funds that follow these indexes must purchase shares of companies added to their benchmarks to align with the index. Traditionally, major providers waited weeks or months after an IPO to include a company. However, following SpaceX’s listing, this approach changed, allowing significant companies to enter key indexes much sooner.

Anthropic is expected to join at least six major indexes, including FTSE’s USA index, the S&P Total Market Index, and the Nasdaq 100, within five to 15 days of its listing. Carsten Hesse, head of index events at Berenberg, noted that “Anthropic is a mirror image of the SpaceX IPO” regarding index-related drivers in the first 15 days of trading. Index analytics firm Intropic estimates that demand from passive funds could account for approximately 28% of Anthropic’s shares on offer, translating to around $19 billion.

What Could Be Different This Time?

The initiation of options trading may also contribute to early buying activity. Traders often buy or sell underlying shares to hedge their exposure when taking positions in stock options. Both SpaceX and South Korean firm SK Hynix experienced significant gains on the third day of trading, coinciding with the start of options trading.

Anthropic’s situation may differ, as employees holding about 15% of the company’s equity will be permitted to sell some shares on the first day. Additionally, the company is raising $26 billion through a separate private sale involving investors such as Google, Nvidia, and AMD, with no lock-up period for those shares. This absence of restrictions could influence the trading dynamics. The rapid index inclusion of mega-IPOs has created larger opportunities for funds that trade around index changes, allowing investors to buy shares ahead of passive funds.

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