Ask yourself why Anthropic magically needs hundreds of billions of dollars a year for compute after IPO, when they were paying essentially nothing before. Ask yourself why OpenAI was projecting $300 billion in losses on compute through 2030 when Anthropic was claiming to be profitable. It’s the same business. Ask yourself why the hell wouldn’t Anthropic just pay the $7.5 billion of original convertible notes with $120 billion cash on hand rather than letting it convert to $108 billion of equity. Don’t be an idiot.

If you’re asking why Anthropic would do this and why it’s not normal, let me explain. Anthropic did this at the request of nervous investors who wanted to hide major OpEx that show Anthropic has basically no chances of profitability in the future. In a normal environment, no early investor would EVER want this, because they would be substantially diluted. In this case, the IPO target is priced so hilariously stupid that it’s a far better tradeoff to the early investors to commit PERFECTLY LEGAL “fraud” to hide the fact Anthropic doesn’t have any path to profitability. $108 billion dilution at IPO is only 5% of equity lost. The investors can easily cover that with puts at IPO to insure their gains. It only happens in major bubbles. Brought to you by $NVDA

Yikes. Anthropic just pulled the exact accounting trick that companies did in 2000 bubble for IPO. They hid all their expenses via convertible notes redeemable at IPO. $108 billion worth. Dotcom firms often paid suppliers, ad agencies, lawyers and even landlords with stock or equity to save cash. AOL swapped shares for services and ads (e.g., Homestore, DrKoop). Telecom suppliers like Lucent, Cisco and Nortel used vendor financing, sometimes with equity or warrants, to drive equipment sales.