Anthropic Goes Public Just as Nvidia Shows Signs of Cracks

The market finished the week higher, but I don’t know that you would call it a victory for the bulls or the bears. This week should be even more interesting, with Nvidia’s results on Tuesday (11/17) and Anthropic’s IPO likely on Thursday, potentially as late as Friday.

Nvidia finished the week right on an important support level going into results. Once the stock gets through that, the next support area is meaningfully lower. The options market in Nvidia has also gotten very bearish. The stock is technically in a negative gamma regime, with more put gamma than call gamma, and delta exposure is extremely bearish.

Mechanically, implied volatility should be fairly elevated going into the report, probably well over 100% for the nearest expiration, I would guess. After the company reports, implied volatility comes down, put and call premiums come down, and dealer hedging flows could unwind and shift, maybe even pushing the stock higher. The problem is we don’t know what the company will say on the call, or whether it pulls guidance. The new CEO used to be the CFO, and she may have a different perspective on how she wants to handle things. That is the biggest risk: that the typical mechanics may not work this time, which makes the stock a complete wild card.

The Nasdaq got back above its 200-day moving average this week, then closed back below it. Last week’s oversold condition has been resolved, but I don’t think that means the worst is over. The S&P 500 closed below its 10-day exponential moving average and failed at the 20-day, and the SMH is still below its 200-day. Markets are in a vulnerable area, and bad results from Nvidia could leave much of tech trading poorly. Nvidia has fallen about 32% from its high since early October, and to its credit, the S&P 500 is down only about 3% and the Nasdaq about 10.5%.

Bitcoin has performed pretty horribly, and it continues to follow the cycle of Treasury bill issuance, which is still building. It looks to be heading back toward the lows. I also think the dollar can continue to strengthen, because I think interest rates are going higher. The 2-year broke out of what looks like a bull flag this week and could get back to 5.25%, and the 10-year could be heading to new highs around 5.5% to 5.6%.

The key detail for Anthropic is in the S-1 on the SEC website. The offering is 825 million shares, but the lock-ups are staggered. On the first trading day, up to 316 million shares held by non-founder directors, officers, and current and former employees and consultants become eligible for sale, nearly 40% of the deal. More follows on the 27th and 48th days and through the 76th day, with about 1.6 billion shares in the first 76 days against an 825 million share offering. Another 1.7 billion comes after the annual results, probably sometime in January.

Not every share will be sold, but that is a lot of potential stock, and it means the offering gets diluted over time. It reminds me a little of Cerebras, a 30 million share deal priced at $185 in May. That stock found a floor around the IPO price, then sold off at the end of September as lock-up shares unwound steadily. I’m not saying Anthropic will follow the same path, and you hope the underwriters price it correctly. But it takes two seconds to find the prospectus and see the unwind pace.

-Mike

Michael Kramer publishes independent macro and options research read across 10+ platforms and by institutional desks.

For institutional partners: research syndication, licensing, and bylined or white-labeled commentary for platforms, brokers, and publishers.

Inquire →

Glossary by Claude

Negative gamma: A state where dealers’ hedging tends to amplify price moves, since they sell as the stock falls and buy as it rises.
Delta exposure: The net directional exposure created by open options; a large negative reading means the options market is leaning toward the downside.
Implied volatility: The level of future price movement priced into options, which typically rises into an earnings report and falls after it.
Dealer hedging flows: The buying and selling of stock that options dealers do to stay hedged, which changes as option premiums and volatility change.
200-day moving average: The average closing price over the past 200 sessions, widely watched as a gauge of the long-term trend.
Treasury bill issuance: The amount of short-term government debt being sold, which can draw liquidity away from other markets as it builds.
Lock-up: An agreement that keeps insiders and early holders from selling their shares for a set period after an IPO.
Shares eligible for future sale: The prospectus section that lists when locked-up shares become available to sell and how many.

Disclaimer

This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.