Billions in losses, no dividends: Inside the AI IPO frenzy

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Depending on which expert you ask, there are a lot of ways to interpret the negative publicity that artificial intelligence companies and their CEOs have been facing over the past month.

Both OpenAI, the company behind ChatGPT, and Anthropic, the company behind Claude, are preparing to go public. Because of this, some sector and market commentators have questioned whether the increasingly dramatic warnings about superintelligence and the future of AI could also help generate investor interest and support the enormous private valuations attached to these businesses.

The Hugging Face scandal and unauthorised access to government systems, including a Services Australia Medicare statistics portal, as well as warnings from former Anthropic employee Jacob Coxon that those developing AI believed the technology “could kill us all by the end of this decade”, however, are being seen by others as genuine roadblocks that could impact their IPO plans.

Importantly, the Medicare incident did not involve access to individual Australians’ Medicare records, but rather non-public aggregate information and internal files. Whatever the case, both companies still remain on track to eventually list on the open market, and the number of people interested in investing in these companies remains extraordinarily high. So if you’re considering investing in either or both of these companies when the IPOs do eventually happen, there are a few important things you need to know and consider before then.

When Anthropic filed its paperwork with the US Securities and Exchange Commission, a requirement before being able to go public, on June 1, it came on the back of a $US965 billion valuation and a fresh funding round where it secured $US65 billion. Market experts initially predicted an IPO would follow in October, but Bloomberg reported this week that the date would now more likely be mid-November, and Reuters has reported that the company is seeking a valuation of more than $US2 trillion.

OpenAI filed its paperwork just a week later, but its projected IPO date has now been pushed out to 2027. In the meantime, the company is reportedly seeking to raise at least $US30 billion in a private funding round at a valuation of around $US1.4 trillion.

Recent history suggests valuations of this size are not impossible. When Elon Musk’s SpaceX, which also encompasses xAI, went public in June, it was valued at roughly $US1.8 trillion at its IPO price before its shares jumped on debut and pushed its market value above $US2 trillion, making it one of the biggest stock market debuts in history.

While this understandably excited many investors, what has followed is seriously important for everyday investors like you and me, and highlights why understanding what you’re investing in is so deeply important. In the lead-up to going public, SpaceX allowed some potential investors to apply for shares through specific firms and platforms as part of its IPO offer. In Australia, retail investors were able to participate through participating brokers including CommSec. According to SpaceX’s Australian prospectus, CommSec acted as the lead Australian retail broker, and investors applying through CommSec needed an International Shares Account.

To take part, investors had to fill out an application stating how much they would like to invest and have their funds ready to go by a certain date. This gave eligible investors the opportunity to buy at the IPO price, which in SpaceX’s case was $US135 per share, rather than waiting until the shares began trading on the open market.

Importantly, we don’t yet know whether Anthropic or OpenAI will offer Australian retail investors the same opportunity. Whether you can participate in an IPO before public trading begins will depend on how each offer is structured, which brokers participate and whether an Australian retail offer is made available. Once the shares are publicly trading on the Nasdaq, however, Australian investors wanting to buy them will need to use a brokerage platform that provides access to US shares and complete any required US tax paperwork, such as a W-8BEN form.

Just because you apply for a certain number of shares in an IPO also does not mean you are guaranteed to receive them. The SpaceX offer was heavily oversubscribed, meaning some people received only a partial allocation of the shares they had applied for, or none at all, and instead had to buy once live trading had begun and the share price was moving.

In the almost four months since hitting the open market, it’s been nothing short of a rollercoaster for SpaceX investors. At one point trading for around $US225, this high was followed by a drop of about 30 per cent, an extremely nasty shock for those who bought in at its peak.

Another surprise for some investors was that SpaceX is not paying dividends. Its prospectus stated the company did not anticipate paying dividends in the foreseeable future and instead planned to retain earnings to fund its growth.

This information, however, was freely available to investors before they purchased the stocks in a document called the prospectus. A prospectus includes information on a company’s risks, earnings, overall financial position, ownership structure and what it intends to do with the money raised during the IPO. While you don’t need to pore over every paragraph like you’re a contract lawyer, being across how the company operates and the ways in which it could fail is essential.

The Anthropic prospectus, reported on by Reuters this week, shows the company recorded a net loss of around $US42 billion last year, although the headline figure needs some context.

Around $US34 billion of that loss related to an accounting charge connected with financing instruments, while its operating loss grew from around $US3 billion in 2024 to around $US8 billion in 2025.

To be clear, I’m not saying this is inherently good or bad, but it is significant information and exactly the kind of thing you want to know about when you’re considering putting your money somewhere. So let’s say OpenAI and Anthropic follow a similar model to SpaceX and open up an IPO offer to Australian retail investors like you and me. We read the prospectus and the offer documents that list the share price, everything sounds good and we have our funds ready to go. If your application is successful, you’ve got your shares and are all set. Happy days! If you’re not as lucky, you can instead head to the open market and trade like everybody else once the stock has listed, so long as you’re using a platform that can trade US shares and have completed any required paperwork.

Before hitting the purchase button, though, you also need to seriously consider how this investment will fit in with your long-term strategy and goals. Because while these companies come with a lot of potential and hype, the flip side of that is potential volatility and short-term drops. Hello, 30 per cent for SpaceX. You need to be fully across what the risks are and how comfortable and willing you are to ride that wave. These companies also come with ethical questions around many aspects of our future, from the jobs market and the environment to autonomous weapons and, as mentioned earlier, the potential long-term consequences of increasingly powerful artificial intelligence. For some investors, those issues may simply not align with their values or goals.

Share investing is best approached with a long-term time horizon, often seven to 10 years or more. By understanding where a company has come from, how it actually makes money, the risks it faces and what its vision for the future is, you can make a more informed decision rather than letting excitement, hype and varying predictions from a range of experts get the best of you.

Victoria Devine is an award-winning retired financial adviser, a bestselling author and host of Australia’s No.1 finance podcast, She’s on the Money. She is also founder and director of Zella Money.

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