YHK - yet another hacker news clone

Yea, my guess is they decided they would rather have the actual Q3 numbers (and any reactions to them) rather than anxiety about unreleased Q3 numbers priced into IPO performance.

Which was probably the right move. The S-1 didn't seem to really change the overarching economic and financial narratives about Anthropic (it seems like whatever people already felt before the S-1, they felt it even more after looking at it).

So I don't think there's going to be any problem with boosters metabolizing the Q3 numbers.

(Idk, maybe this was their plan from the jump.)

>We aren’t shareholders, though, so why should we care?

They're going through an IPO, so unless this is a one-off thing, people reading this thread will become shareholders, either directly or through their pension pots.

Sometimes accounting is weird because it's necessary to prevent tricks. Why do all your held-to-maturity bonds become "tainted" and get revalued at market prices when you sell a couple, even though nothing has changed about them? Because any other rule would let a company which cannot in fact hold bonds to maturity get up to tricks and systematically overstate their assets.

So while yes, this does look a lot like shareholder dilution, that doesn't really satisfy the question of why it's not treated that way under GAAP. Perhaps GAAP is just wrong, or perhaps there's some possible tricks which Anthropic is provably not engaging in. What it's definitely not is a one-time adjustment now that it's happened in two consecutive quarters.

Lol, pretty much exactly that. "Wait wait, I wasn't ready yet."

That's not the takeaway of this analyst or anyone I have heard.

This is specifically about the end of tokenmaxxing and how much worse the growth rate would look after the Q3 numbers came out.

(I do think moats are shallow, and I personally switch away from Anthropic every few months for a while, but I've been coming back. All software moats have been made more shallow now, affecting the entire investment landscape.)

Models are not a moat for sure.

Anthropic is working hard to create a vertically integrated stack from model to harness to productivity apps. That may or may not work, but it’s clear they see models as a value add for integration and not a product that can be a moat in themselves.

The product doesn't have a moat, but anthropic's branding and enterprise focus seems to be quite valuable.

I disagree. Our devs use Claude for coding. When OpenAI had Astra, no one switched even though the company allowed OpenAI models.

Very generous indeed. Here is the updated chart. The downward movement should not be overlooked.

https://x.com/billylo/status/2117276235852345425?a=4-pjgf1Ox...

People will point out that +46% is still good, but this is like measuring the escape velocity of a projectile that's still at 1000 feet. It's not that the projectile isn't going very fast or won't get very high, it's that if you want to have enough momentum to break out of Earth's gravitation pull you can hardly afford any deceleration.

> Now we see that actually growth is levelling off ...

I really don't understand how could it be otherwise? They're planning to IP at a valuation representing 5% of the US GDP and, unlike NVidia, they are neither selling shovels in a goldrush nor a business with decades-old proven track of records.

Are people really going to buy ANT thinking it'll 10x to 50% of the US GDP?

Aren't there better stocks to YOLO on if you think you could maybe 10x? And if you want something safe instead of YOLO'ing, aren't there plenty of companies much safer and much more boring to invest in than something IPO'ing at 5% of the US GDP?

Isn't the entire Anthropic narrative based on infinite growth? How is infinite growth sustainable?

10x year over year couldn't continue for long--they were what...3.5 years from exceeding US GDP?

47% quarterly growth is still 4.5x annual growth, which would put them at $300+ billion revenue in a year. This is still unprecedented growth for a company of this size.

The negative perspective depends on assuming that the 47% quarterly growth is going to continue dropping soon. And it is going to drop, since it's only a bit more sustainable than last year's growth. The question is how many hundreds of billions they're making a year when it levels off.

If we assume LLMs will continue to advance at a pretty rapid pace (relative to the current rate of advancement; so, same or faster), all these numbers look good to me.

Some people just start out with wanting LLMs/AI/Anthropic to fail or be scams and consistently try to fit any new evidence pegs into those unchanging hypothesis-shaped holes. This group ideologically despised LLMs from the start and needs them to be fake.

Booster is an exaggeration.

No they are not. Big tech companies started capping AI usages already and those are their major clients.

This is the correct analysis here. 47% QOQ growth IS objectively amazing. But it's not enough for a $2T valuation.

If you are trying to indicate that revenue is somehow not a key indicator of a successful business, or that somehow revenue growth is not the primary indicator used to derive Anthropic's eye-popping valuation for IPO, then I think you have lost the plot.

Revenue is the one number that indicates how interested customers are in your product. What would you have us measure, then?

Some of my nephews ran a hugely successful pokemon card selling business (for ten year olds). I later found out that their mom was buying all their card packs for them to open and sell.

They stopped when the free packs stopped coming and they needed to finance their own.

If you go just by operating income, they showed they can be profitable in Q2, and the operating loss in Q3 is fairly small (in relative terms. For every 32 dollars in revenue they lost one dollar). They haven't shown wild profits, but nobody expects them to. Any money they make has more value when it's reinvested into growing their market share and growing the market, making next quarter's numbers look better. And imho they have solid enough financials that they can make the bleeding stop if the money faucet turns off

All of that isn't very newsworthy though. We knew all that from the Q2 numbers. What is interesting is that reinvesting all their profits to make the number go up in the next quarter didn't work as well this time as it did all the other times

When was the last time Ed Zitron got a prediction/claim correct?

Required reading if you're citing Zitron: https://danluu.com/zitron/

I agree. Their financials are fine. They look like a company that has solid foundations, with room to grow but close enough to profitable that they can survive the end of the AI boom

But are they still a 1.5T USD company if their growth is already slowing this much?

You're assuming costs remain high.

Pretty much every technology in history is available at several orders of magnitude lower cost than the first few years of it being invented.

AKA eventually everything runs on a potato.

It’ll only be profitable because they’ll enshittify it with ads.

Meta? They're not even in the game. They don't provide inference to anyone. I think NVIDIA or any other hardware players that want to step up and take the bags of money awaiting them are the only actual winners. They also win when we inevitably move to local AI for many use-cases.

Could it 1/100x? Yes.

1T companies common place in the next 5 yrs? 20 yrs?

Yes, but the trend is pretty clear based on the link I posted.

you can't acquire your way to value, because the seller will want their piece when they sell, and eat up that value as their premium for selling.

The only way to get value from acquiring other companies is to buy them when they're distressed.

I'd like to see the list then.

In some ways it is crazy, but at the same time, anyone that has seen typical efforts of "digital transformation" in aging Fortune 500 companies is going to be skeptical of said company's abilities to become relatively efficient. I always considered that new entrants that don't think like they do would eventually win once the value of putting tech in the middle of decision making, getting rid of large divisions worth of cruft was worth enough. Trying to do the very same thing by competing with everyone is similar once you squint. You get extra money from your parent company to throw around during growth or massive reorg, but still have the problem of iffy incentives we currently see in the modern tech holding company, where what is good for the company, for consumers, and for the random VP have nothing to do with each other.

I don't fully agree with you that it doesn't make sense for Anthropic to claim it is in competition with every other industry.

Take a look at how OpenAI has shaken up higher level math.

Frontier AI labs have a Swiss army knife of a tool that can do as well or better than every other company or collective in every industry.

Say you have a magic hotpot that can deliver any dish you want and each dish it delivers can be as good or better than any restaurant in your area of business. You basically cannot be beaten in the food business. Your competition can only cry about their cooking being more artisanal or whatever but at the end of the day convenience and cost will triumph.

Now say you have a magic pen for art, a magic jukebox, a magic text generator for authorship, and so on. You get the idea why I don't think Anthropic is wrong.

Maybe they can use it, but if there is an overshoot of investment in compute, future competitors may get it for firesale prices while Anthropic pay more than full price. That is, they can get dragged down by those commitments not because their own growth is lacking, but because the market gets weaker. They may even contribute to it, the more competitors they kill, the less demand there is for compute.

Before you start using multiples - you should know that p/s multiples are internally inconsistent.

> we all know Anthropic's revenue will not be anything remotely like flatline for awhile.

How can you confidently say that? At some point they oversaturate and growth stalls. Didn’t F100 have a major pullback already this year on AI spend?

I wouldn't be so sure as to say definitely.

There's a world where capabilities narrow and Anthropic is stuck selling a commodity (not like they don't have any competition now). In this world it's not unbelievable that Anthropic would trade around or below 1x revenue no?

I think calling Anthropic a tech company could be like calling an electric utility a tech company.