Is Anthropic Lowballing Its Own IPO on Purpose?

Public.com presents The Rundown, your daily market update in 10 minutes. My name is Zaid Admani, and today is Tuesday, November 10th. In today's episode, we'll tell you why this morning's inflation report has the market worried about a big Fed rate hike in December. We'll also give you an update about Anthropic's upcoming IPO and why the company might be going public at a lower valuation than expected. Then stick around to the end of the show to find out which TV franchise has become one of the biggest in the world, and not many people are talking about it. We got a great show. So for you today, let's go. Stocks kicked off the week with a monster rebound on Monday as dip buyers jumped back in after last week's brutal sell-off. The S&P 500 jumped 2.3 percent, its best day since April, and the Nasdaq jumped by 2.7 percent. And we had a broad-based rally yesterday. Over 400 stocks in the S&P 500 finished higher, and all 11 sectors finished in the green as well for the first time since May. Even last week's beaten-down chip stocks bounced back hard today. With the SOX semiconductor index jumping nearly 7%. And I think what made Monday's rally even more impressive is that the market did all of that while Nvidia's stock fell by more than 4%. As we discussed on yesterday's show, Nvidia's board launched an investigation into CEO Jensen Huang over affairs with a suspected Chinese spy. If you want a full breakdown on that story, go check out yesterday's episode. Now, the one thing working in the market's favor right now Is lower oil prices. It looks like investors are getting more optimistic about a potential diplomatic resolution to the Iran war. President Trump even said that strikes on Iran wouldn't be necessary. Brent crude actually dropped below $90 a barrel this morning for the first time since August. I mean, less than two weeks ago, Brent was trading near $118. Gas prices in the US are now back under $4 a gallon for the first time since July. Cheaper gas could eventually ease some pressure. So I think that's one reason why the market was rallying so heavy yesterday, but it's giving some of that back today because we just got the October CPI report this morning and it came in hotter than expected. Consumer prices in October rose 0.4% compared to September. Economists were expecting a 0.3% increase. And this increase in prices was pretty broad. Food prices jumped half a percent. Electricity was up almost 1%. And housing costs climbed by 0.3%. And the more concerning news is that core inflation, which strips out food and energy, that jumped by 0.3% month over month versus the 0.2% expected. And here's why the core number is such a big deal. Because just this morning, before the CPI report came out. Fed Governor Chris Waller said that if core inflation came in at 0.3% or higher, the Fed should consider a half-point rate hike at the December meeting. Well, core inflation did come in exactly at 0.3%. So now the question isn't whether the Fed is going to hike rates in December. That seems inevitable at this point. The question is whether how big of a rate hike are we going to get? According to the prediction market on public.com, the market is pricing in an 87% chance of a 25 basis point hike. 10% chance of a 50 basis point hike. Now, one thing to keep in mind, the drop in oil prices is not in this report. So we could see some inflation relief in the next report. Regardless though, the CPI report is sending stocks in the red this morning. I'm recording this right at the open and both the S&P and NASDAQ are moving lower. So I think oil prices and inflation could play a role on how the market rebounds from this tech sell-off. We're going to continue to track all of it and stay on top of everything. So definitely get subscribed to the podcast if you haven't Tune in every day to stay in the loop. Let's run through some headlines, starting with Anthropic. We just got an update regarding Anthropic's upcoming IPO. This morning, Anthropic said they plan to sell 825 million shares at between $70 and $78 a share. So doing some quick math here at the top of that range. The IPO would raise about $64 billion, making it one of the biggest IPOs ever. Now, an important distinction here, not all of that money would go to Anthropic directly. This IPO offering includes shares sold by the company, but also shares sold by existing shareholders. And obviously, the shares that are being sold by existing shareholders don't go to the company. They go to the shareholders themselves. I think the biggest headline to come from the update this morning, though. is the valuation haircut. You know, a couple of weeks ago when Anthropic filed their S1, they were targeting a $1.5 trillion valuation. But depending on where the share's IPO at, this valuation for Anthropic could be between one and 1.4 trillion. So that's a slight haircut and it's a significant haircut from the $2 trillion numbers that were being thrown around back in August. I think the recent AI sell-off might be playing a role here. But I also think there's some strategy happening here as well. You know, sometimes bankers will set the IPO price a little low on purpose. So it leads to a first day pop. No company wants their shares to fall on the first day of trading, especially this one. I feel like if Anthropic IPO flops, it would probably hit the whole AI trade pretty hard. But if we get a nice rally from Anthropic IPO, it could reignite the entire AI trade. So we should find out what happens in a couple of weeks. Shares are expected to start trading. Before Thanksgiving and between now and then, Anthropic and their leadership will be doing a IPO roadshow to drum up investor demand. According to Bloomberg on Friday, CEO Dario Amodei is expected to do a live stream with JP Morgan CEO Jamie Dimon to sell the deal to investors. I don't know what I have to do to get access to that live stream, but if someone can get me access. Slide into my DMs, please. By the way, Anthropic also dropped the new Frontier model yesterday called Claude 3.5. And I wouldn't be surprised if they released a few more things in the next couple of weeks to drive up as much hype for the IPO. So we'll continue to stay on top of this. I can't wait to see how Anthropic stock trades on the first day of trading. Let me know in the comments if you guys are planning to buy on day one, or will you wait for the hype to settle? Personally, I tend to wait for the hype to pass, but I wouldn't be surprised if Anthropic has a pretty decent first day pop, especially now that they've lowered their valuation target. Let's talk about some stocks making moves today. Shares of the video game company Take-Two Interactive are climbing this morning, despite the company missing on earnings. Bookings fell 18% compared to last year to $1.6 billion. That's how much money players spend on The company blamed the weakness on. Poor sales for NBA 2K. But honestly, nobody really cares about what the company did in Q3 because GTA 6 comes out next week on November 19th. It's the first new Grand Theft Auto in 13 years. And the CEO says that pre-orders are in uncharted territory. Now, he didn't give any numbers on the earnings call, but according to Sensor Tower, the game has already sold about 7.7 million copies, which is worth around $750 million. For some context, GTA V made about $800 million. Take-Two stock is up around 4% this morning at the time of this recording. But what's interesting is that despite all the GTA 6 hype, Take-Two stock is down 15% on the year. Moving on, let's talk about Rocket Lab. Rocket Lab shares are down, despite the Rocket company reporting a decent quarter. Sales came in at $268 million, which was better than expected. And their backlog, which is basically work they've signed, but haven't done yet. Jumped from $2.4 billion to $3.6 billion. So they added $1.2 billion in backlog in a single quarter, which is very impressive. But despite that, shares of Rocket Lab are down around 4% at the time of this recording. I think one reason for that might be that Rocket Lab stock did jump 11% on Monday before the company reported earnings. So maybe the expectations were elevated and some traders decided to take profit. Once the earnings came out, finally, let's talk about on shares of the Swiss sneaker maker on holdings are sliding this morning after they reported earnings. Now, on paper, it was a decent quarter. No pun intended. Revenues in Q3 jumped 17 percent, beating estimates and profits also came in ahead of estimates. But a big chunk of that profit came from tariff refunds, which is a one-time boost to the company's earnings. And some analysts were concerned about the softer sales coming from On's own stores and website. Now, On has maintained their full-year sales outlook, but that wasn't enough for investors. On stock is down around 5% this morning at the time of this recording. And if you zoom out, the stock has lost about 20% of its value this year. On a side note, shout out to everyone that recommended that I buy some On. I just bought some On Cloud Six. And oh my God, they're very comfortable. So thank you for that recommendation. Let's wrap the show with a fun fact. One of the biggest TV franchises in the world is a show called NCIS. NCIS has been on air since 2003 and CBS estimates that the show has brought in $10 billion in sales over its lifetime between ads, licensing deals, and merch. Shout out to everyone buying NCIS merch out there. You know, despite it not making a lot of headlines, this show is an absolute ratings monster. In fact, the most watched new show on TV this fall is NCIS New York, which is averaging over 7 million viewers an episode. But you know, it's not just a bunch of boomers watching NCIS on cable television. This show is also a streaming monster. According to numbers from Nielsen, since 2020, Americans have spent more time streaming NCIS than shows like The Office, Friends, even Bluey. The only show that has more streaming hours than NCIS is Grey's Anatomy. So again, NCIS might not get as much hype as shows on Netflix or HBO, but a lot of people are watching it. Personally, I don't think I've ever seen an episode of NCIS outside of some commercials when I watch football. But if you're an NCIS fan listening, let me know in the comments on why you think this show has been so successful over the last couple decades. Well, all right, guys, that's the rundown for today. Hope you guys enjoyed today's episode. If you did and you have like five extra seconds, consider giving us a five-star rating on Apple, Spotify, YouTube, wherever you listen to your podcast. You know, all that engagement really does help us out and it helps other people find the show. Thank you guys so much for listening, watching, and commenting. Shout out to Mike and V for all the work behind the scenes. And we'll see you guys back here in the next one.