Why Steve Eisman Isn't Buying Anthropic's IPO

Ed Elson is joined by Steve Eisman to get his takeaways from Anthropic’s S-1, including what data points he thinks investors should focus on and what he makes of the company’s corporate governance structure. Then, Prof G Media’s own Dan Chiolan joins to break down the winners and losers in the autonomous vehicle race. Finally, Ed explains why he thinks the Anthropic IPO is misunderstood. Steve Eisman is the legendary Big Short investor and Host of the Real Eisman Playbook. Dan Chiolan is a research associate at Prof G Media. To watch a replay of Dan’s autonomous vehicle livestream as well as the rest of our Prof G+ content, you can head to profgmedia.com and click on the “Prof G Plus” tab. Subscribe to the Prof G Markets Youtube Channel Follow Prof G Markets here: Instagram: instagram.com/profgmarkets X: x.com/ProfGMarkets TikTok: tiktok.com/@profgmarkets Threads: threads.com/@profgmarkets Follow Ed on Instagram, X and Substack Follow Scott on Instagram Send us your questions or comments by emailing [email protected] Learn more about your ad choices. Visit podcastchoices.com/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

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• 2:12Ed Elson?

  Welcome to Prof G Markets. I'm Ed Elson. It is October 28th. Let's check in on yesterday's market vitals.

• 2:20Ed Elson?

  The major indices climbed with tech rallying for a second day. All eyes will be on Microsoft and Google's earnings tonight. Brent crude was volatile again, but ended the day around $114 per barrel. The yield on 10-year Treasuries was stable, ahead of the Federal Reserve's interest rate decision out later today. And finally, Meta shares declined nearly 2% following the completion of its $25 billion stock sale. The sale was part of its plan to raise nearly $100 billion in equity for its AI ambitions. Reportedly, though, the offering was five times oversubscribed. Okay, what else is happening? As we discussed yesterday, Anthropic's highly anticipated S1 is out,

• 3:03Ed Elson?

  and investors are still digesting the filing. Today, we wanted to get another opinion about the company's upcoming IPO and some of the questions that have gone unanswered, including its financial feasibility, Anthropic's governance, and also the state of the AI bubble at large. So here to break it down is one of our favorite guests, Steve Eisman, the legendary Big Short investor and host of The Real Eisman Playbook. Steve, great to see you. I'm going to start general. What did you make of this filing? What jumped out to you?

• 3:38Speaker 04

  Well, the thing that jumped out to me the most were two things. The first was, there's an awfully long list of

• 3:47Speaker 04

  future capital commitments that add up to something. I mean, it depends what you include, don't include. 800 to 900 billion. You know, when you're at 800, 900 billion, what's 100 billion amongst friends? It doesn't really matter. So that's just one thing that is, I don't know if the word is concerning, but just the way these people operate is, you know, that's just what they do. So that's the first thing. What I thought was even more interesting was that the numbers are only through the second quarter. Now, I have heard that they're going to have to put out third quarter numbers before they go public, although I'm not 100% sure that's correct. However, there are reports out there

• 4:32Speaker 04

  that at least have the revenue for the third quarter as well as the compute and infrastructure cost for the third quarter. And that actually tells a tale. Because for those of us who, you know, have been paying a lot of attention, as we all know, in the first half of this year, token maxing was at its height. This is, and for those viewers who don't know what that is, token maxing is where basically software engineers were ordered by their companies to use AI 24/7. And to hell with the costs. But after the first half of the year,

• 5:09Speaker 04

  people got a lot more cost-conscious. The Chinese open-weight models took more market share. And so what I wanted to see was, what happened in the third quarter after the token maxing was over? And so if you look at the fourth quarter, first quarter, second quarter, and third quarter, and you look at two statistics, the sequential revenue increase,

• 5:35Speaker 04

  and then the revenue divided by the compute infrastructure expense. So if you go to the fourth quarter of last year, which was really just before token maxing really took off, revenue growth was 43%, and the ratio was 0.69x, which meant, of course, that revenue was less than compute expense. Okay, first quarter, token maxing takes off. Revenue growth goes from 43% sequentially to 135% sequentially, and the ratio goes from 0.69 to 1.4. Impressive. And then in the second quarter, which was the height of token maxing, revenue growth jumps again to 147%,

• 6:18Speaker 04

  and the revenue to compute goes to 2.08x. Now, let's talk about the third quarter. Third quarter, token maxing is over. Revenue, sequential revenue growth goes from 147% to 45%. And the revenue divided by compute goes from 2.08 to 1.7. That tells you something. That tells you that the end of token maxing has had an impact. The other thing that I have heard, I haven't been able to confirm it, is that sometime in October, Anthropic cut its prices by about 50% to try and get back a lot more market share. Whether that's going to come out on the roadshow, I don't know. But it certainly would be the data points

• 7:02Speaker 04

  that I would be focused on the most.

• 7:04Ed Elson?

  Something that was notable, looking through the filing, is that a lot of those charts that they put up at the top, showing you how the business is doing, they do not include Q3 at all.

• 7:15Speaker 04

  Right, that's why I bring it up.

• 7:17Ed Elson?

  And there has been speculation that that was an intentional decision in order to hide the, what seems like a reality, which is that the business growth is slowing quite significantly, as you have just explained. Do you think it was intentional?

• 7:34Speaker 04

  Only very intentional. That's all. Only very intentional.

• 7:39Ed Elson?

  Very intentional.

• 7:40Speaker 04

  Yes. Not intentional, very intentional.

• 7:47Ed Elson?

  I guess this gets to sort of a larger question about this filing, which is like, how much does it actually tell us? Is really the question that I'm trying to get at. Because you point out the future compute commitments, which for me, that was the most important thing that I read. I'm like, okay, they have narrowed their losses. They're getting to a better place, that's good. Oh, but hold on, $800 billion coming down the line. And in addition to those $800 billion in compute costs that we're going to see at some point, they also say that they're going to significantly increase capital expenditures, which to me tells me they're going to just build data centers, which seems like a massive pivot, a massive change to the business.

• 8:29Speaker 04

  I don't know if they're going to build data centers, but they're certainly going to be spending a lot more money. Either, maybe they'll rent, you know, and that'll cost them a ton. I don't know. But clearly, I agree with you from what you're saying that, put it this way. When you commit to $800 billion, your expenses are going up. How much they're going up? We don't know, because I'm not the CFO of the company. I don't know, you know, how this is all going to play out. I read one report from someone who argued that by next year, they'll be spending

• 9:05Speaker 04

  80 to 100 billion dollars in capex. So, so, you know, but I don't even know what that, is that expensed? Or does that go on the balance sheet? You know, it's unclear.

• 9:16Ed Elson?

  But it seems as though eventually that's going to have to show up in the income statement in some way, whether it's through depreciation or whatever it is. It's going to show up. And it's not showing up right now. The way it shows up is at the very bottom of the document as basically like a footnote. So that's going to be a massive change to the business. And then, as you say, it does seem that the current revenue is a pretty important, or current Q3 revenue is a pretty important item that tells you something about the future of this business over the next, you know, near future, over the next 12 months. What I can't tell is, did this S1, did it really tell us much about this company?

• 9:59Speaker 04

  I think it's very, very backward looking because it's giving you a snapshot of the company at the height of token maxing and before Chinese open-weight models really started to take market share. More, you know, imagine, like, I only heard, I found a report that said that Anthropic cut prices by 50% to gain back market share. I don't know if that's true. Let's assume it is.

• 10:29Speaker 04

  That's an incredibly important data point before you go public, that you just cut prices by, you know, this is not the 47th Street, we know, we cut prices in half. And we're bragging, you know, cutting prices in half could be dangerous, you know, that the question then would be, okay, you cut prices in half, how much more market share did you get? Did your revenue go down? Did it go, did you take so much market share that your revenue went up? I don't know. But, but you know, that would seem to me to be the most important question to be asked.

• 11:02Ed Elson?

  I mean, the, the, the question for investors, the ultimate question is, do you invest in this thing?

• 11:07Speaker 04

  Oh, I have an answer for that.

• 11:11Speaker 04

  That I can answer you.

• 11:13Ed Elson?

  Tell me.

• 11:14Speaker 04

  No.

• 11:16Ed Elson?

  You kind of got to the point quickly. I was going to ask you, would you need to know the answers to the questions that you just brought up before investing? I assume the answer is, yes, you would.

• 11:27Speaker 04

  Well, yes, but I think, look, to me, the bigger, the, the bigger, bigger, bigger question is, it just seems, you know, that there are no moats around this business. I mean, if it's the case that they actually did cut prices by 50%, that would reinforce the concept that there are no moats, and that the only way you're going to gain share is price. Being in a business where you are committed to spend $800 billion, where your entire franchise is just simply based on price, is dangerous.

• 12:00Ed Elson?

  There is another interesting angle on this S1, which was the governance structure.

• 12:07Speaker 04

  Oh, please, it's ridiculous. What's there to talk about? You're, you're a shareholder in this company, you have no rights. Okay, let's move on. If you want to play, if you want to invest in that company, that's up to you. You know, it's been disclosed, you have no rights, zero rights. You want to play? Play. You don't want to, you know, if you think that's very important, then you won't play.

• 12:32Ed Elson?

  Just to clarify for our listeners, so there are multiple classes of stock here. You've got, you've got the regular voting shares, you've got the regular non-voting shares, then you have this class T share, which is controlled by the, what they call the long-term benefit trust. And apparently, this is sort of this committee that gets to choose the board of directors. But most importantly, there is also a class F share, one single class F share, which is controlled by the seven co-founders of the company. And the share, most importantly, carries 50.1% of the vote. How much does that matter when evaluating an investment like this? Like, you know, beyond if you would like to have

• 13:13Ed Elson?

  a vote, does it tell you something larger about this company and whether it's investable?

• 13:18Speaker 04

  I don't think so. Yeah, we could make this, we could make the same criticism of Meta. And, you know, Meta, as a stock generally has done very, very well. But this is what goes on in tech world. They don't like their own shareholders. That's basically what's, what's happening.

• 13:35Ed Elson?

  Founder worship, institutionalized. It's supposed to go public at $2 trillion. That has been the expectation. There has been some debate as to whether that price might be cut. People were talking about one and a half trillion dollars. What is your expectation for when this thing goes out?

• 13:53Speaker 04

  I have no expectations. I have no information other than what I read in the papers.

• 13:58Ed Elson?

  Do you have a, a view on investor sentiment? I mean, one thing that I can't quite figure out myself is, did this filing make investors more or less confident in the business?

• 14:10Speaker 04

  I think it actually made it more confident, because people weren't pointing out that it's only going through the second quarter and what that meant. So it's going to be very interesting to see what sentiment looks like if, if, and I don't know if this happens, they have to drop third quarter numbers in before they go public.

• 14:27Ed Elson?

  Yeah, the third quarter numbers could potentially change the game. If that happens, would you expect that the sentiment will turn quite precipitously?

• 14:38Speaker 04

  I mean, it should, but, you know, we're not conducting a group therapy session with the investing world. So I don't know how people.

• 14:48Ed Elson?

  That's all I want.

• 14:49Speaker 04

  Me too. I don't know how it's going to react. I never know. I absolutely don't. I love when people, you know, some people, they'll always say, it's in the price. It's in the price. And I always want to say, how do you know? Like, who did you ask? Did you take a poll? Like, on basis, do you say that? But people say this all the time. And I, and I always say, I don't know.

• 15:11Ed Elson?

  Just as we start to wrap up here, any other things that you're looking at in AI world, things that you think are especially important that we should keep track of?

• 15:20Speaker 04

  Well, the other big thing to keep track of, obviously, is the price of CoreWeave's debt. You know, at 15%, I think, although I can't prove it, I think it's prohibitive for them to raise debt at 15% and build AI data centers. But, you know, if it gets worse, then they're really out of business. You know, they, their, their business model is basically, we raise debt, we build AI data centers. That's it. That's the entire business model. And if they can't raise debt, they can't build AI data centers. That's really the, now, maybe, you know, Nvidia will come in and backstop the whole company, you know, it's certainly possible. But barring that, you know, I would be watching the debt markets.

• 16:04Ed Elson?

  Steve Isman is the legendary Big Short Investor and host of The Real Isman Playbook, which is a great podcast. I highly recommend it. Steve, always appreciate your time.

• 16:14Speaker 04

  Thank you.

• 16:17Ed Elson?

  After the break, the state of play in the autonomous vehicle race. And for even more markets insights, you can subscribe to my weekly newsletter. Simply put, go to edward elseen.substack.com.

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• 18:37Ed Elson?

  We're back with Prof G Markets. Earlier this week, we discussed the future of Tesla and its foray into the lucrative autonomous robotaxi business. But while Tesla rolls out their robotaxis across the country, they face one major obstacle, and that is competition. Companies like Alphabet, Amazon, and Uber are also looking to capitalize on the future of transportation. So we would like to take a moment to attempt to answer the following question. Who is actually winning in autonomous vehicles? And what does the future of autonomous actually look like? Today, we're speaking with our very own research team associate, Dan Shalhoun, who recently presented on this very topic on our Prof G Plus Substack.

• 19:22Ed Elson?

  It was a great presentation. I learned a lot. So that's why I wanted to get into it today. Dan, I see you every day, but thank you for joining me on the show. I just want to start with a general question, which you started within your presentation, which I thought was very helpful, which is, how big of a problem are vehicle deaths today? In other words, make the case for us, why autonomous is actually a good thing?

• 19:49Speaker 07

  It's sort of hard to conceptualize just how dangerous driving is, because we, as Americans, do it so often. We spend on average about an hour a day behind the wheel. But every year, 40,000 Americans die in car crashes. Globally, that number is over a million. It's the leading killer of people ages five to 29. And I think why those numbers are relevant to autonomous vehicles is because 94% of car crashes are due to human error. So really, driving isn't dangerous because cars are dangerous or roads are dangerous. It's because humans are dangerous. So I think that's why autonomous vehicles are very, a very exciting technology, because it can allow us, as Americans, as people around

• 20:31Speaker 07

  the world, to take something that we need to do every day and make it significantly safer.

• 20:35Ed Elson?

  Looking at the players in this industry, obviously Tesla is getting into robotaxis. The rollout has been I don't even know what to say about it anymore. It's been, it's taken a while. Who are the actual players in this industry, though? And how do they all stack up against each other?

• 20:54Speaker 07

  Yeah, so I think we can start with Tesla. And to understand Tesla's autonomous business, you really have to split it into two. So the first is the consumer side, and that's FSD. That's the software that Tesla sells directly to Tesla owners, which allows Tesla drivers to have the car drive itself under supervision. Currently, about 1.7 million people globally pay for it. But then there's the other side of their autonomous business, which is their robo taxi business, which is their autonomous ride share business that's in direct competition with Waymo and other players here in America. So here they're doing well. They're scaling very quickly. They have a fully commercial service in six cities.

• 21:37Speaker 07

  And just last month, they started putting cyber cabs on the road, which are their purpose-built autonomous vehicles with no steering wheel. So despite the fact that they are, they are moving very quickly, they're, they are very clearly in second place to Waymo. Currently, Waymo does about seven times the amount of miles that Tesla does weekly. They're in 15 American cities. They're doing 500,000 paid rides weekly. So they're, they're very far in the lead. I think there are two others worth mentioning. The first is Zooks, which is owned by Amazon. It's their self-driving startup. They're currently in two American cities and they have about 100 vehicles on the road. So they're pretty, they're pretty early stage. And then the last one is Uber, which actually doesn't have any vehicles or technology on its own.

• 22:19Speaker 07

  But through partnerships with other autonomous vehicle companies like, like Zooks, like Waymo, it's able to facilitate autonomous rides in five American cities currently.

• 22:30Ed Elson?

  I'm surprised to hear you say that the Tesla rollout has been quick because you say those numbers, those Waymo numbers, which are phenomenal compared to Tesla. I guess what has been promising about the Tesla rollout of their robo taxi, specifically in contrast to Waymo, which on the outside, it seems like Waymo has been a lot more successful.

• 22:55Speaker 07

  Yeah, so I think the thing that Tesla has really done well in these past few months is scale up very quickly. For a while, sort of in typical Elon Musk fashion, we were getting promises about an autonomous service rolling out in Austin and California, when in reality you'd call a Tesla robo taxi and there'd actually be a human safety monitor behind the wheel. In the past couple of months, they've, they've ditched the safety monitors in six cities. Like I said, they're, they're fully commercial, fully autonomous. But the biggest advantage that Tesla has over Waymo is cost. So those Tesla cyber cabs cost about $25,000 to produce, whereas Waymo's costs upward of $100,000.

• 23:38Speaker 07

  They have a sort of much more thorough sensor load in the vehicles that they produce, which makes them more expensive. It makes them harder to build and take longer to build. So Tesla's really ramped up now. Still, I don't mean that to say that Tesla is in first place in any sense. Tesla is still significantly behind, but just in the past couple of months, they've gone from kind of not existing in terms of their robo taxi service to having something operational.

• 24:05Ed Elson?

  On an international level, who is winning the AV race? It sounds like you believe that, that the winner currently is Waymo, but Tesla seems to be beginning to catch up. On an international level, US, China, who's winning autonomous?

• 24:23Speaker 07

  Yeah, so I think internationally, it's definitely between the US and China. There are, you know, countless companies in China trying to do autonomous driving. I think where China is really winning is in manufacturing because they have the ability to manufacture electric vehicles and autonomous vehicles at a cost that's much lower than, than any American company. But in terms of commercialization, America is definitely in the lead because there's no company in China that's doing as many paid rides as Waymo is. So, so we're sort of very clearly in first place in that aspect.

• 24:59Speaker 07

  The thing that I think is important to know is most likely we will never see each other's technology. Like, America's never going to allow Chinese self-driving companies here in America and China won't allow American self-driving companies in China. The place where the race is really going to play out is in the Middle East and Europe, where those, those countries can kind of, you know, choose which country to, to get their autonomous driving technology from. And I think what's interesting so far is in the Middle East and in Europe, they've by and large gone with Chinese companies, whereas, you know, American companies like Waymo or Tesla have not been able to expand internationally.

• 25:38Ed Elson?

  Do you think that is a function of Chinese technology being better? Or maybe it's a geopolitical strategy? I mean, I can't tell if that says something about China's influence on Europe and the Middle East geopolitically. What is your read?

• 25:57Speaker 07

  I think they already have entered those countries with their electric vehicles and their vehicles in general, which has allowed them to get sort of a foothold in the market there. But I also just think it's, it's, it speaks to American company's strategy of focusing on the domestic battle first. Right? Waymo does have plans to expand internationally, but they're really focused on rolling out here in America first.

• 26:21Ed Elson?

  One of the other obstacles for autonomous has been regulation. What does the regulatory picture in America look like right now?

• 26:29Speaker 07

  So it's currently very fragmented and that's because it's all happening at the state level. There's really been no federal framework or action sort of passed by the federal government to guide these companies on how they should be regulated. And that is a very messy process because it means each of these companies needs to go through the painstaking process of lobbying each state individually to be able to test and then to, you know, be able to operate non-commercially and then commercially and then expand from there. And so what that has produced is, is a pretty large lobbying battle between, you know, drivers' unions and unions at the state level and then these robo taxi companies. We've also seen Waymo dramatically ramp up their federal lobbying spend in the past couple of years.

• 27:12Speaker 07

  So I think the political battle is going to continue to play out in America. I do think it's also interesting to note that autonomous vehicles are not sort of insulated from the political backlash that the rest of, you know, AI and autonomous robotics in general have received here in America. We talk about it on the show often. It's the same force that has sort of prevented data center construction in many local communities. So public opinion on AI is souring and I think we're seeing that reflected in what people think about autonomous vehicles. There's a really interesting poll here. Gallup polled Americans in 2018 about whether or not they think that some amount of autonomous vehicles improve road safety overall.

• 27:56Speaker 07

  And at that time, about 52% of Americans agreed. They ran the same poll last year and the share of Americans who agreed actually went down by 12%. And that's despite the fact that, you know, in that time, autonomous vehicles went from basically not existing to getting exponentially safer every single year. So it's really, you know, it's impossible to divorce people's sentiment about AI and this technology in general from the, the technology itself.

• 28:24Ed Elson?

  Despite the fact that it is statistically safer is my understanding. As we wrap up, if you wanted to make bets on autonomous, say someone's listening to this, they're like, oh, I want to bet on this thing or invest in this, I shouldn't say bet. How would you do it? What are the trades or the investments that you would look at?

• 28:46Speaker 07

  It's pretty early days for autonomous vehicles. But as the technology progresses, I think there's going to be a couple of places you can look for winners. The places where I'm going to be looking is first in the sort of picks and shovels play, which are companies that are actually making the components that go into these vehicles. I think the first opportunity here are going to be companies that make LiDAR sensors. And those are those expensive sensors that are in Waymo's and, and Zooks's and pretty much every autonomous vehicle. And I think the reason why there's an opportunity there is because currently 95% of passenger car LiDAR sensors, which are in these autonomous vehicles, are made in China. And obviously that's a huge national security risk. Those Chinese-made sensors are already banned for military use.

• 29:32Speaker 07

  And there's actually bills in Congress that would ban them for civilian use as well. So if that happens, there would be a huge opportunity for American companies to come in and manufacture those sensors. So there's going to be some winners there. The second is going to be in the maintenance and upkeep of autonomous vehicles. Because unlike Uber and Lyft where drivers themselves are maintaining their vehicles, these companies are going to have to maintain thousands of vehicles at scale across the country. You know, they need to, to charge the vehicles, they need to park them, they need to clean them. Currently, there are a few startups that are looking to do this as a service for those companies. But there is an industry here in America that I think is going to see a huge windfall from this need, which is the car rental industry.

• 30:15Speaker 07

  You know, if you think about car rental companies, they already have these facilities around the country sort of ready to go. And just last week, actually, Hertz announced that they're standing up a new leg of their business to do exactly that, to service autonomous vehicles. So I think we're going to see, see more car rental companies sort of pivot in that direction as well. And then I think the last winner is going to be the trucking industry. Because if you look at trucking, about 44% of trucking's marginal costs come from driver compensation and benefits. So if you can automate those costs, you know, it's obviously very lucrative. There's currently a company called Aurora that's testing self-driving on American roads. And then Tesla also produces a semi truck, which they say will eventually have full self-driving capabilities, although it doesn't quite yet.

• 31:01Ed Elson?

  Dan Chiolan is our research associate at Prof G Media. Really fascinating stuff. Thank you. If you want to watch a replay of the, the live stream that Dan did on this industry, it's like an hour long, I want to say it's, it's super in-depth, but it's super informative. You can go to profgmedia.com, click on the Prof G Plus tab. We do a lot of these more in-depth, deep dives over on Substack. Dan, thank you. I'll see you tomorrow. Appreciate your time.

• 31:31Speaker 07

  Thanks for having me, Ed.

• 31:37Ed Elson?

  Before we end, let's return to Anthropic's S1 filing, which has polarized a lot of investors. Some look at the revenue growth and they say that the company is incredible. Others look at the net losses and they say it's terrible. The largest IPO in history is bringing out a lot of emotions from investors, which I get, but it also makes me think that maybe this IPO is fundamentally misunderstood. So to end this episode, I would like to do a little bit of myth busting on Anthropic and more specifically on Anthropic's IPO. So number one, yes, the company did rack up an $80 billion net loss in the first half

• 32:18Ed Elson?

  of the year, which sounds bad, but no, that doesn't actually matter. Why? Because those losses were a product of the increase in the fair value of Anthropic's convertible notes. In other words, investors lent Anthropic money and in return, those investors later received equity. And because of how accounting laws work, Anthropic technically had to write that up as a widening expense, but in reality, it was simply a reflection of how valuable Anthropic had become in a remarkably short period of time. So the $80 billion net loss, that's a red herring. Okay. Number two, yes, Anthropic's first half revenue grew 1,300% year over year, which is incredible.

• 33:02Ed Elson?

  But no, as Steve points out, it has not kept up that extraordinary growth, not even close. The part that the S1 in many places left out is that revenue growth slowed down significantly in Q3. As Steve said, it was 150% quarter over quarter in Q2 and then less than 50% in Q3. And that's not necessarily bad, but it does show that maybe the AI frenzy is beginning to come to an end. And finally, number three, yes, Anthropic did narrow their losses quite significantly. It was more than $2 billion in the first half of last year versus less than $700 million this year. That is good, but no, that trajectory is not going to continue.

• 33:47Ed Elson?

  The most important numbers in the filing came at the end of the document where we learned that Anthropic has signed more than $800 billion in future compute commitments, none of which are reflected in the current income statement, but all of which eventually will be. That includes a $110 billion contract with Amazon, a $115 billion contract with Google, a $161 billion contract with Broadcom. What it doesn't include, however, are the billions of dollars in capital expenditures, which they are about to register probably to build out their own compute. That's not something I believe because I had a hunch about it. I believe that because they literally told us that in the S1.

• 34:28Ed Elson?

  In other words, that $800 billion number is actually probably going to be a lot higher. And as a result, this company's losses are about to explode. Now, did they time this IPO so that we wouldn't have to look at those losses on the income statement? Possibly, but that's a theory. It's not a fact and this segment is specifically devoted to things that we know for sure. The truth about the Anthropic S1 is that the income statement doesn't tell you the full story. It doesn't mean it's a bad company. It doesn't mean they don't have an incredible product. They do, but it does mean that there is still a lot of risk. The business model hasn't been figured out yet. And until it is, we must treat Anthropic with the appropriate level of caution.

• 35:11Ed Elson?

  It's still a highly risky venture bet. Things could still go spectacularly wrong. What it certainly isn't is a proven, safe corporate investment, something that its potentially $2 trillion valuation might suggest. In sum, not much has changed, but whatever picture the profitability is painting right now, all I can tell you is that next year, that picture is going to look drastically different.

• 35:43Ed Elson?

  Okay. That's it for today. This episode was produced by Claire Miller and Alison Weiss and engineered by Benjamin Spencer. Our video editor is Brad Williams. Our research team is Dan Shalon, Kristin O'Donoghue and Mia Silverio. And our social producer is Jake McPherson. Thank you for listening to Profitec Markets from Profitec Media. If you liked what you heard, give us a follow. I'm Ed Elson. I'll see you tomorrow.

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