Later this year, we might see artificial intelligence (AI) powerhouse Anthropic list on the Nasdaq or the New York Stock Exchange (NYSE). If the IPO goes ahead, it’s likely to be a big one – we could be looking at a valuation of well over $1trn.
Interested in gaining exposure to the AI company before the IPO? Here’s a strategy that could be worth considering.
This company has a huge stake in Anthropic
Back in May 2023, communications company Zoom (NASDAQ: ZM), the company that makes the video call platform, made an investment in Anthropic through its investment arm, Zoom Ventures. The exact financial terms weren’t publicly disclosed in the initial press release. However, analysts have estimated that the early-stage investment was worth around $51m.
Back then, Anthropic was only valued at around $4.5bn. Today though, the company’s valued at around $900bn. That means Zoom’s stake has increased in value about 200-fold. Believe it or not, that $51m’s now worth about $10.2bn (assuming it hasn’t sold any of its position).
The thing is, Zoom’s market-cap’s only around $29bn today, meaning that about 35% of its market-cap’s related to Anthropic. In other words, if an investor was to put £10,000 into Zoom stock today at the current share price (just under $100), they’d essentially be investing around £3,500 in Anthropic.
Other attractions
It’s worth pointing out that Zoom has other things going for it, beyond the large investment in Anthropic. For a start, we have consistent revenue growth.
Despite a huge ‘pull forward’ in revenue during the pandemic, and competition in the video call market from the likes of Microsoft Teams and Google Meet, Zoom’s revenue’s grown every year over the last five years. Last financial year (ended 31 January), it hit $4.869bn.
One thing to note here is that Zoom’s heavily focused on enterprise customers (about 60% of its revenues are enterprise related). These kinds of customers (big institutions) tend to be more stable than retail customers.
We also have a strong balance sheet. This is a company that’s financially sound.
How’s the valuation?
As for the valuation, it’s relatively low. Looking at earnings forecasts for the current financial year, the forward-looking price-to-earnings (P/E) ratio is only 17.
So investors aren’t paying a huge premium for the Anthropic exposure. Right now, the company’s reasonably valued.
(Quietly) ticking higher
One other attraction of the stock is that it’s not really very popular or well owned (there’s no hype around it). This means there’s scope for a re-rating.
Worth a look?
Now, there are risks, of course. Competition from the Big Tech rivals including Microsoft and Google is one.
A lot of people today seem to think that Zoom’s offering is superior to others, but that could change. Disruption’s common in the tech/software space.
Another risk is Anthropic’s valuation. There are no guarantees this company will continue to have success and that its valuation will remain high.
I think the set-up looks relatively attractive at current levels though. In my view, this stock’s worth considering.
