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 (NVDA)’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 (BTC.X) 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.

(SEC.GOV)

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.