Jay Ritter “Mr. IPO” flags Anthropic IPO valuation risks Damilola Esebame Sat, November 14, 2026 at 1:47 PM EST 5 min read ANTH.PVT NVDA -3.12% Trade NVIDIA on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
Anthropic is preparing for a stock market debut that could rank among the largest technology initial public offerings (IPOs) ever, but its proposed valuation is already raising questions about how much investors stand to gain.
The five-year-old Claude maker set its IPO price range at $70 to $78 per share, Anthropic's amended S-1 filed November 10, 2026, showed.
Also read: Anthropic's IPO results in an unusual contradiction for investors
That range would give the company a fully diluted valuation of approximately $1.26 trillion to $1.41 trillion, the Wall Street Journal noted.
The question every buyer faces is whether a stock priced above $1 trillion on day one can still deliver meaningful percentage returns.
I asked Jay Ritter, Director of The IPO Initiative at the University of Florida, widely recognized as "Mr. IPO," that exact question weeks before Anthropic disclosed its pricing.
When I asked Ritter which numbers matter most to a retail buyer weighing an IPO, he pointed to total valuation rather than the per-share price. That number reveals how much growth is already priced in and how much room remains for a stock to appreciate, he explained.
He used Nvidia as his reference point, noting that the chipmaker went public in January 1999 with a market value of about $350 million at the offer price.
Nvidia now commands a market value above $4 trillion, translating to a return exceeding 10,000% from that initial offering price, Ritter noted.
The $1.33 trillion midpoint reported by the Wall Street Journal falls squarely within the range Ritter warned about before the pricing became public.
If they go public at 1.33 trillion dollars and grow to 4 trillion, that's only 200% upside. Even for that to occur, the company's going to have to be able to earn something like $200 billion per year. Only a few companies in the history of the world have ever been able to do that,
Alphabet, the most profitable U.S.-listed company, earned roughly $125 to $135 billion in adjusted net income for the twelve months ending June 2026 after excluding non-cash gains on equity stakes, according to its Q2 2026 10-Q filing.
Anthropic would need to close that gap without existing annual profits to build on, all while funding billions in compute spending, his framework implies.
Anthropic's annualized revenue climbed from $9 billion at year-end 2025 to roughly $47 billion by May 2026, then to $81 billion by October 31, 2026, at an unusually rapid pace, Bloomberg reported.
Revenue for the first half of 2026 totaled $16.3 billion, representing a 1,300% increase from the same period in 2025, Anthropic's prospectus showed.
Still, the company posted a 2025 net loss of roughly $42 billion, though $34 billion reflected a non-cash accounting charge.
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Independent research firm New Constructs called the potential listing "the most ridiculous IPO of 2026" and valued the company at roughly $150 billion, CNBC reported.
The firm warned that the gap between Anthropic's growth and its proposed market value was an "unprecedented test of investor gullibility," CNBC confirmed.
PitchBook analyst Harrison Rolfes calculated that a $2 trillion valuation would have priced Anthropic at about 435 times its 2025 revenue.
Anthropic's disclosed pricing came in below that estimate, but the valuation still dwarfs what most technology companies have commanded at their debuts.
Ritter raised the question of competition, noting that the AI industry could develop like Boeing and Airbus, with two major players dominating the market.
Both companies build products that competitors struggle to replicate, yet neither earns the profit margins their dominance might suggest because of fierce competition, Ritter explained.
That dynamic could repeat in AI, where Anthropic, OpenAI, Google's Gemini, and open-source rivals all compete for the same enterprise contracts.
Ritter noted that a meaningful shift toward cheaper open-source models has already begun to change the competitive landscape in recent months.
Ritter framed his broader concern around whether Anthropic, like SpaceX, can convert its technological edge into sustained profitability at scale.
"Great companies, great technology, but are they going to be able to convert this into big profits?" Ritter told me.
Anthropic's amended S-1 filing disclosed that price reductions in new model versions and contractual discounts lowered revenue by about $600 million between the second and third quarters of 2026.
Ritter warned that this kind of pricing pressure could prevent Anthropic from generating the sustained profits his valuation framework requires to justify the entry price.
Ritter drew a clear distinction during our interview between building a successful business and delivering strong returns for shareholders. Even a promising company can disappoint investors when its starting valuation already assumes almost everything will go right, he explained.
He recommended comparing Anthropic's fully diluted market capitalization with its quarterly net income to see whether earnings justify its rising valuation.
He also highlighted the importance of tracking how much Anthropic earns from each token as competitors introduce cheaper alternatives. If rivals offer similar artificial intelligence capabilities at lower prices, Anthropic could face pressure to reduce what enterprise customers pay.
That pressure matters because compute and infrastructure costs already consume a significant share of the company's revenue. These expenses fell from 58% of revenue in the third quarter to 48% in the second quarter, Anthropic's amended S-1 filing showed, before reversing direction in the latest quarter.
Whether Anthropic can bring those costs down while protecting its pricing power will help determine whether its valuation makes sense.
Related: Anthropic faces a junk rating that could cost IPO investors
This story was originally published by TheStreet on Nov 14, 2026, where it first appeared in the Investing section. Add TheStreet as a Preferred Source by clicking here.
