All three have generated huge investor excitement, but their enormous valuations have also raised eyebrows.
Sam Dickie, senior portfolio manager at Fisher Funds, told Nadine Higgins on The Prosperity Project podcast that while the valuations of each company are extraordinary using most of the standard metrics – their growth is also extraordinary.
“Anthropic was, what? $80 million of revenue two, two and a half years ago. It’s $30 billion today” Dickie says.
“We’ve never seen these growth rates at scale in the history of the world.”
That helps explain why these listings are arriving with eye-watering valuations despite generating little or no profit – investors are factoring in future growth.
“If SpaceX listed at a premium $2 trillion for zero profit, you can understand that there’s a lot of faith in the future,” Dickie explains.
Dickie says they are “amazing companies doing amazing things” - but they are also attracting amazing valuations.
Some fear that retail investors are arriving late to the party. Because vast pools of private capital are now available, companies can stay private far longer than they once could, meaning retail investors gain access at a much later stage.
“The cynic would say the reason they hit the IPO market is not to access more capital to build and grow, but to give insiders a big liquidity event,” Dickie says.
In other words, an opportunity for founders, employees and early investors to sell some of their investment and turn their paper wealth into actual wealth.
Not only are valuations enormous, but it’s a huge amount of money to be raised within a short timeframe.
Dickie notes the three companies are expected to raise roughly US$200b between them. That’s equivalent to the entire amount raised during the dot-com IPO boom, but concentrated into just three companies rather than more than 1000.
Mention of the dot-com boom inevitably raises questions about whether the current AI fervour is also becoming a bubble.
Dickie says: “We’re starting to see some fairly eerie signs, there’s no doubt about it. I wouldn’t say we’re in a full-scale bubble yet, but we’re heading towards it.”
Watch or listen to the full episode of The Prosperity Project for more.
The Prosperity Project is hosted by Nadine Higgins, an experienced broadcaster and financial adviser.
Follow the show at iHeartRadio, Apple Podcasts, Spotify or wherever you get your podcasts. New episodes are released every Monday.
