Anthropic's $80.7bn loss: note revaluations dominate, and $1.5tn buys no control

Anthropic's $80.7bn loss: note revaluations dominate, and $1.5tn buys no control

Exclude $72.4bn in fair value charges and $8.8bn in other expense, and the first half earned $0.4bn after stock pay. The S-1's adjusted figure is $2.7bn. Seven founders and a five person trust hold the votes.

Anthropic's $80.7bn net loss for the first half of 2026 is almost all accounting. The S-1, confirmed by the company, shows operations account for less than 1% of it.

Reuters reports that some current and prospective investors now value the company at about $1.5tn, down from roughly $2tn a week earlier. At $1.5tn a buyer pays about 22 times annualised third quarter revenue. The May round valued the company at $965bn, so the price is 55% higher in five months. In return the buyer gets a Class A share with at most 49.9% of the vote in aggregate. It has no say in who sits on the board while the founders agree.

The loss reflects a rising valuation, while quarterly operating income has turned positive. Buyers pay for growth without gaining control.

What makes up the loss

The operating loss was only $693m. A $72.4bn fair value change on convertible notes, derivatives and SAFEs (simple agreements for future equity) is most of the rest.

Other expense adds $8.8bn, mostly the first recognition and later revaluation of assets and liabilities under the note purchase agreements. That is a second markup. Interest income of $1.1bn offsets a little, and tax costs $21m.

On the S-1's own adjusted basis, the first half earned $2.7bn, a 10% adjusted operating margin. That figure adds back $2.2bn of stock pay. Our stricter figure keeps stock pay as a cost. Take out the two large lines and the half year earned $397m. That is interest income less the $693m operating loss and the tax.

Amazon's conversion terms

Amazon's notes hold much of the markup. It lent $6.2bn, interest free.

At the IPO the notes convert into up to 1,840,444,962 non voting Class N shares. The price is $2.09 or $5.05 a share, or the IPO price if lower. Amazon's stake at conversion is capped at 12%.

The Series H preferred sold from May to June at $58.90 a share on the post split basis the note table uses. At that price Amazon's 1.84bn conversion shares are worth up to about $108bn, if the 12% cap does not bind. That compares with $6.2bn of principal. That is arithmetic, not a balance sheet value.

The S-1 says the charge was "primarily driven by an increase in the fair value of our outstanding convertible promissory notes resulting from an increase in our enterprise valuation". When the notes convert at the IPO the charge stops.

Fair value changes of $113.2bn make up 85% of the $132.9bn accumulated deficit.

Revenue and operating margins

Operating income turned positive in the second quarter. It was $974m, an 8.4% margin, on revenue of $11.6bn.

Revenue was $4.7bn in the first quarter. A year earlier, in the second quarter of 2025, the company lost $1.2bn on $787m of revenue.

Third quarter revenue was higher still. Anthropic told prospective investors on 14 October that it reached $16.8bn, up 45%, and was profitable on an adjusted basis, Reuters reported.

Annualised, that is $67bn. At $1.5tn the multiple is 22 times, and at $2tn it is 30 times.

The company says the margin may compress as new compute lands. Compute and infrastructure already takes $5.6bn, or 48% of second quarter revenue.

Revenue grew 1,368% in the second quarter from a year earlier. Compute cost grew 300%. That gap explains the margin, and it narrows as new capacity comes online.

Anthropic said in April that run rate revenue had passed $30bn, from about $9bn at the end of 2025.

Demand is broad. No customer exceeded 10% of revenue in the nine months to 30 September, and the top five were about 25%. More than 11,900 customers spend over $100,000 a year.

The greater exposure is in sales channels. Marketplaces run by Amazon, Google and Microsoft carried 48% of first half revenue. Those companies are also investors and suppliers.

Who controls the votes and board

The structure decides what the buyer owns. One Class F share, held by a Founder LLC of the seven founders, carries a fixed 50.1% of the vote on matters put to stockholders. All Class A together can never exceed 49.9%.

One trust controls the board. The Long-Term Benefit Trust has five financially disinterested trustees and holds the single Class T share. That share has no economic rights and elects a majority of the board.

Together the trust and the founders will elect every director. The S-1 says Class A holders generally will not be able to affect the outcome of any vote, "regardless of how they vote", unless the founders cannot agree. Then Class F votes in line with Class A.

The S-1 also warns that the multiclass structure may make the stock ineligible for indices. Passive funds that track those indices would then not buy it.

Changing the structure is hard. If the trustees agree, 80% of the board and 80% of the trustees can amend the trust.

If they disagree, there are two routes. For three years after the IPO, all founders must agree, with majorities of Class E and Class A. At any time, 66 2/3% of the founders, 75% of the Class E votes cast and a Class A majority suffice.

The founders' control ends slowly. If fewer than three Continuing Founders remain for 90 consecutive days, a 450 day transition period starts. After it, Class F and Class E are redeemed for no consideration.

Legal risks and share sales

Politics adds an overhang. In February the President directed agencies to stop using Anthropic's technology. A federal court in California granted Anthropic largely summary judgment on 27 August.

On 25 September the D.C. Circuit, by 2 to 1, held the separate Section 4713 designation proper.

Share supply is the last overhang. Staff stock awards carry $26.6bn of expense not yet booked, and 91m more units worth $5.8bn were granted after 30 June.

Of the $26.6bn, $2.9bn is booked at once in the IPO quarter, and the other $23.7bn is spread over about 2.1 years.

Supply starts early. Non founder directors, officers and staff can sell from the first trading day and on days 27, 48, 62 and 76. They can sell again after the 2026 annual results, then every 14 days after that.

The rest of that group is released at the earlier of two trading days after first quarter 2027 earnings or 180 days. Employee stock therefore reaches the market before the first earnings report as a public company.

The seven founders and holders of more than 0.5% are held until the earlier of two trading days after third quarter 2027 earnings or 365 days. Goldman Sachs and Morgan Stanley lead, with 20 other underwriters.

At $1.5tn, 20 times annualised revenue needs fourth quarter revenue of $18.8bn, up 12% on the third quarter. A range above $1.7tn needs $21.3bn, up 26%.

A range that needs more growth than that is paying for growth the company has not yet shown. Reuters reports a mid-November debut, before Thanksgiving on 26 November. The price range comes first.