Posted by dgellow 1 day ago
At which point, the stock is well-traded on the open market and has found a "correct" market price, with no necessary relationship to the valuation at IPO.
I want to see this go out at $800b. I do not believe even $1T will be supported by public markets unless they shrink the float — but that also comes with its own risks.
Challenge is while you can play games with the float size to jack up the price as existing shareholders start selling you have to convince more and more people of a sky high price when all the fundamentals and the market pulling things in the opposite direction. Employees have been royally $&@ked in prior IPOs as that story plays out.
The trading price you see on the screen is - shortly afterwards the shares become publicly tradable on the exchange (or on all US equities exchanges, for US stocks). So in effect, the price shooting up on the public markets is actually bad for the company in that they might have left money on the table.
E.g. SpaceX is currently trading below its IPO price. If you became a shareholder by buying at IPO and held your have lost money as of today.
Apple: 5 T
Google: 3.5 T
Meta: 1.55 T
Microsoft: 3.97 T
Berkshire Hathaway: 1.2 T
Eli Lilly: 1.28 T
Tesla: 1.38 T
Walmart: 1 T
Spotify: 125 billion
Honestly crazy that we’re doubting 1T, even with all the capital issues behind it.
So the whole valuation is based on the idea that folks will happily pay this company a huge markup for inference over the actual cost of compute for a model whose valuation is rapidly tending to zero. Hence why potential investors are starting to freak out.
I just don’t see a world where everyone is happy buying the second or third smartest model. The people using the smartest will just out compete them, even if it is marginally more expensive.
Most intelligent is a stretch, we don't know how the Chinese architectures would fare if they had the same compute availability as Anthropic and other US labs.
If we extrapolate and consider that they are behind due to artificial export restrictions, once they figure out how to build their own GPUs in a cost-effective/scaled-up way then the American labs' claim of having the best intelligence is at an enormous risk.
They already do a great job being resource constrained, imagine once this constraint is gone!
I can easily spend a LOT less time on describing the same amount to claude than i would in a JIRA ticket and doing code review on the PR of Claude than talking to a person about it. Instead of 1-4 weeks Claude is done in an hour.
Its also already A LOT faster and better of analysing infrastructure issues.
So say Anthropic, or OpenAi, or smartGummyBearsAI go IPO and the price is insanely high... and then spirals down to be 10% of the real price... they earn a lot of money and the public loose a lot of money.
IF smartGummyBearsAI goes 100% realistic price and you buy near the correct price, they earn their fair money and people get an investment.
IF smartGummyBearsAI says that they have technology to use the same machine that makes gummy bears print gpus and they are priced 10,000x their actual price the society just transfers a lot of wealth to them and they scam the society.
Why shouldn't we regulate and aim for the correct price?
Remember 801k money is what we are talking about
That's why it's dropping here. When the actual stock market tanked yesterday institutional investors were like - hey wait a minute this is starting to look too expensive.
Also if your 401(k) is in index funds you are safe. A company is not added to indices right away. If you are in actively managed funds or something like that you might have more exposure risk.
Markets have the advantage that many peoples' opinions are aggregated into the market price. This is far, far more accurate than having one person's opinion (an elected bureaucrat) set the price, particularly when they have no skin in the game.
If the IPO price is really 10x the public market price, that implies that the set of institutional investors collectively estimated the price 10x higher than the full set of retail investors. That's pretty unlikely: institutional investors usually do pretty extensive due diligence on IPOs, and you're already averaging out the statistical fluctuations by selling to a wide set of them. But if that does happen, it just means that institutions got fucked over to the benefit of retail (who gets a 90% discount on the same shares), which seems like something we should be celebrating.