When AI company Anthropic begins trading after its expected IPO next week, its share price in the initial weeks may depend as much on who is required to buy the stock as on who wants to own it.Investors are looking to Elon Musk’s SpaceX, which went public in June, for clues. Its listing changed the playbook for mega-IPOs by triggering rapid inclusion in major stock market indexes, creating a large pool of buyers soon after trading began.Anthropic is expected to follow a similar path. The Claude chatbot maker aims to raise up to $64.4 billion by selling 825 million shares at $70-$78 apiece, valuing the company at up to $1.4 trillion.
How index inclusion drives demand
Index providers track groups of stocks representing a particular market. Funds that follow these indexes, known as passive funds, must buy shares of companies added to their benchmarks to match the index.Earlier, major providers generally waited weeks or months after an IPO before including a company. But following SpaceX’s listing, the rules changed, allowing large companies to enter key indexes much sooner.Anthropic is expected to join at least six major indexes, including FTSE’s USA index, the S&P Total Market Index and the Nasdaq 100, within five to 15 days of listing. “Anthropic is a mirror image of the SpaceX IPO. In that regard, it has the same index-related drivers over the first 15 days of trading,” said Carsten Hesse, head of index events at Berenberg, as quoted by Reuters.Index analytics firm Intropic estimates that demand from passive funds could account for around 28% of Anthropic’s shares on offer, or roughly $19 billion.Funds tracking an index typically buy shares when the inclusion takes effect. But hedge funds and specialist traders often buy earlier, anticipating this demand and hoping to profit from a rise in the share price.The relatively small public float could amplify this effect. Only around 6% of Anthropic’s outstanding shares are being offered in the IPO.SpaceX followed a similar pattern. It reserved a fifth of its $75 billion offering for retail investors, more than twice the usual allocation. Retail investors and index funds bought nearly half the shares sold, while other fund managers positioned themselves for further demand.SpaceX shares rose 50% from their opening-day debut price by the third day of trading and remained above the IPO price for the first 15 days. “You don’t wait till day 5, day 10, day 15, when you see the implementation of the index upgrades or inclusions,” Hesse said. “As we’ve seen with SpaceX, people are buying early.”
What could be different this time?
The start of options trading can also add to early buying. When traders take positions in stock options, they may buy or sell the underlying shares to hedge their exposure. SpaceX and South Korean firm SK Hynix both saw sharp gains on the third day of trading, when options trading began.Anthropic’s trajectory could differ, however. Employees, who own around 15 per cent of its equity, will be allowed to sell some shares on the first day. The company is also raising $26 billion through a separate private sale involving investors such as Google, Nvidia and AMD. Those shares will not have a lock-up period, which normally restricts early investors from selling for a specified time.The faster index inclusion of mega-IPOs has created bigger opportunities for funds that trade around index changes. Such investors buy shares ahead of passive funds, hoping to benefit when the latter enter the market.Earlier, these trades were limited by smaller IPO sizes and the risk of too many investors chasing the same opportunity. Mega-listings offer a much larger pool of shares and potential demand. “It’s a bit of an evolution of the market,” said Brian Hartigan, global head of ETFs and index investments at Invesco.“If you’re in index rebalancing, these are probably the events of a lifetime,” said Bill Park, CIO of Altisma Capital Management.