What is one key take away for buying IPO stocks?

The Personal Investor does well in the financial markets when he differentiates between noise and facts. Noise is everything which is outside the area of business and financial ratios.

What is good personal investment work?

When you critically question expectations and promises set forth by company officials and investment banks. And further observe if the company has build a successful business prior to the Initial Public Offering.

How does a personal investor assess an IPO stock?

No different than with any other stock. So, a personal investor looks at stock price and company profits.

Is buying a stock during an Initial Public Offering a good investment?

When you look back at the five largest IPOs, stock performances were poor following the IPO.

The Personal Investor and Initial Public Offerings: The idea of flying horses

Dobromir Risov
9 hours ago
5 min read

Updated: 2 minutes ago

by Mag. Dobromir Risov, BSc. June 2026

sometimes private investors believe tales rather than look at facts — Pegasus, the winged horse from Greek mythology (shutterstock).

Introduction

Today I will discuss the topic of Initial Public Offerings for the Personal Investor. For that purpose I will case study Anthropic, an Artificial Intelligence company which wants to go public.

Initial Public Offering – a Corporate Finance Tool

When a company is set up, it needs capital to start its operations. That capital comes from the owners of the company, privately held. When you start a company, there is an idea, and with a plan and with some capital, hopefully the business idea becomes profitable. The process of turning an idea into profits takes usually 3-5 years. Gradually the company uses its profits to fund expansion. Sometimes debt can be used too. And in some cases additional equity is needed to expand operations. Sometimes additional capital is not sought after from private investors but from the broad public. That´s what an Initial Public Offering is. Raising capital publicly requires the company to disclose a lot of information about itself.

Today´s case study – Anthropic

What is the company doing?

Anthropic is a company dealing in Artificial Intelligence sector. Former employees from Open AI (Artificial Intelligence - a bubble? ) founded Anthropic in 2021 (Handelsblatt). The Artificial Intelligence tools developed by Anthropic are said to change business processes and software development. How beneficial are AI tools for customers? In a survey cited in yahoofinance, 40% of 1.000 companies using AI tools reported cost savings below 10% after implementing AI tools.

Who owns the company shares at the moment?

Given Anthropic is still a private company, it is not possible to find detailed information on the ownership structure. According to Editorworld.com owners holding sizable stakes in Anthropic are: Amazon, Alphabet and the founders of Anthropic themselves. The article further reports there are 90 distinct owners of Anthropic stock. The total capital reported to be 72 $ billion. The article is from February 2026 and there was another capital raise in May 2026. During this round Anthropic successfully raised an additional amount of 65$ billion to expand its operations (Handelsblatt, Barron´s). New investors joined in May: investment funds such as Blackstone, Greenoaks or Sequoia Capital. Adding the two figures together I arrive at a total of 137 $ bn. A check with reveals the total to be at 133 $ bn according to forgeglobal. There is a discrepancy of 4$ bn. It is very close nonetheless.

Investment basics - how is the company doing?

Do I need to be an expert in Artificial Intelligence to assess an AI Firm as a potential investment? No. Here are some details: Anthropic reported revenue for the second quarter of 2026 at 11$ billion. Anthropic says revenue doubled compared with quarter 1. Is Anthropic profitable? No, as I don´t find information on that. However, Anthropic reports it expects to turn in an operating profit. While the company has yet to report its first profitable quarter since its inception five years ago, the company´s valuation was adjusted to 965$ billion. At the same time, investors can buy Shell, the fourth largest oil and gas company for 210 € bn. (The adjustment for the foreign exchange is small.) The investor acquires for one fifth of Anthropic´s valuation, a solid profitable business.

A look in to the past: how did stocks perform after the IPO?

Let´s have a look at prior Initial Public Offerings to gain an idea where the journey for Anthropic could go. The information below is on the five largest Initial Public Offerings.

History hints buying IPO stocks is a poor investment.

For more information, I added to the table two columns not in the original table: the foundational year and the sector.

The largest IPOs were companies with a decade long track record prior going public. These companies had established a solid businesse already. The case study company, Anthropic is still in the development stage of its business.
There are well known names amongst the largest IPOs – most known probably Visa. The four largest IPOs raised very similar amounts of equity – close to $ 40 billion. It is not known yet how much Anthropic wants to raise.
Stock performance in the very short-term: during the first three months after the IPO two stocks performed negative: the stock of Saudi Aramco and Enel. The other three stocks performed positively in the double digits.
Stock performance in the short term: during the first 12 months after the IPO, four stocks performed negatively. Alibaba stock being worst among negative performers with -37%.

So why did these IPO stocks perform poorly? The article states as “the expectations set at their IPOs were unrealistic”. When that is done disappointments about performance are looming even with companies with solid business fundamentals.

Summary

I showed expectations were too high with Initial Public Offerings in the past. Disappointing stock performance followed in the very short and short term. Stocks of companies with solid businesses were no exception to that. But, what happens when expectations are high and the company has no solid business? The stock market results were disastrous. I talked about it in this blog (South Sea Bubble - a lesson for personal investors).

As for today´s case study company Anthropic: Is the company solid? I don´t think so given the data available. The company is still in an developmental stage five years after its foundation. No profits until now. The company continues to have to rely on outside financial resources to do business. When you decide to invest in Anthropic stock at the IPO, the personal investor is going to have to rely on promises. Can the company still turn profitable? Yes. Can the company stock increase many times without the company being profitable? Yes. Would I buy the stock? No. Whether a stock is publicly traded or not, for me solid financials are decisive.

Do you want to save yourself the headache? Learn the trade of investing here: Courses (List). To close the blog with the Greek horse Pegasus: don´t hope for finding the winged horse.

Frequently Asked Questions (FAQs)

What is one key take away for buying IPO stocks? The Personal Investor does well in the financial markets when he differentiates between noise and facts. Noise is everything which is outside the area of business and financial ratios.
What is good personal investment work? When you critically question expectations and promises set forth by company officials and investment banks. And further observe if the company has build a successful business prior to the Initial Public Offering.
How does a personal investor assess an IPO stock? No different than with any other stock. So, a personal investor looks at stock price and company profits.
Is buying a stock during an Initial Public Offering a good investment? When you look back at the five largest IPOs, stock performances were poor following the IPO.