Damodaran: Anthropic's IPO will be priced on ARR — $67B run rate, $1.5-2T valuation questioned
rohanpaul_ai · x · 2026-10-24
NYU's Aswath Damodaran, the "Dean of Valuation," published a long analysis of Anthropic's IPO. Key points:
- At its pre-IPO investor meeting Anthropic reported Q3 revenue of $16.8B (up 45% QoQ), positive adjusted profits, and a $67B ARR, with estimates it will exceed $100B by year-end.
- Damodaran argues Anthropic will be priced on run-rate revenue rather than cash flows; justifying $1.5-2T requires very fast growth, 30%+ operating margins, compute costs growing slower than revenue, and falling risk.
- He compares ARR to dot-com-era "eyeballs": young companies are always priced on inventive metrics, but ARR definitions (gross vs net, annualization window) vary widely and deserve skepticism.
- The essay systematically explains why pricing supplants valuation for young companies.
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