The Wall Street Skinny

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[The Wall Street Skinny @thewallstskinny]

This Wednesday's Fed decision might be the most important market moving event of the year. But when you hear “the market’s pricing in a 68% chance of a Fed rate hike”…do you know how anyone’s actually coming up with that number? Or how to judge whether the odds should be higher or lower for yourself? There are trillions of dollars of risk riding on this one outcome, and if you want to understand the simple math, we've got you covered in less than 3 minutes on one sheet of paper (as always)!

[The Wall Street Skinny @thewallstskinny]

Could Anthropic IPO for a $3 Trillion Valuation?

What about $2 trillion, which is what regular finance media (the Financial Times) has reported they’re targeting.

Anthropic's IPO is expected in the next couple months, with the S-1 expected in October.

That will tell us about past profitability, net cash and debt, lease obligations. What it won't tell us is the number that actually drives valuation. Equity investors are forward looking, and for a company growing this fast, 2028 is the year investors are pricing off of. That means we typically like “consensus research estimates”, but the banks on the deal can't publish until roughly 25 days after the stock starts trading.

With that said, this exercise was an attempt to use available public info — Anthropic has shared expected 2028E revenue of $190-200bn — to get an idea of how and why numbers like $2 trillion and $3 trillion are being thrown around. I’m not saying it should be valued at 12-13x 2028E revenue (heck revenue multiples aren’t ideal) but it’s how you get to the valuations being reported. And 12-13x is in line with comps.

Now this is the problem with bubbles; you’re valuing things relative to other assets that may be also inflated.

Which is why the DCF it’s important. I personally will be looking to see what Aswath Damodaran (my favorite valuation guru) puts together when he does his analysis. But the problem with the DCF is there are SO MANY ASSUMPTIONS aka guesses. While it’s the valuation gold standard, there’s a saying: garbage in garbage out and there’s a lot of uncertainty. However, the process of building a DCF forces analysis of the business model, capex needs, projected cash flows etc.

Regardless, ultimately, pricing will be based on how investors decide to allocate capital and to them it’s: Anthropic vs. NVIDIA vs. OpenAI (post IPO) vs. other tech / AI names in their portfolio

Please not: since we created this video, we found out Anrhopic’s S-1 is likely coming out closer to October and the IPO itself will be closer to early November.

[The Wall Street Skinny @thewallstskinny]

I got to ask @SecScottBessent one question at the Charlotte Economics Club post-G20...so of course I asked about the bond market.

Here's his (condensed) response:

[The Wall Street Skinny @thewallstskinny]

Everyone was talking about NVIDIA’s record Q2 earnings but NVIDIA doesn't "make" AI chips anymore than Apple "makes" the iPhone.

They outsource the manufacturing.

Here's a breakdown of the major players in the semiconductor industry in under 3 minutes. ⬇️

[The Wall Street Skinny @thewallstskinny]

Get your tin foil hats on: I'm going to explain why the $12.5bn sale of the LA Lakers (the craziest story in sports right now) is ACTUALLY the biggest Private Credit scandal of the year.

The real question now is: what other sports teams and rare assets may be up for grabs, and how widespread is this kind of activity in the first place?

Quite possible that this shakes up the entire foundation of private markets investing as we know it today, where all the major private capital players have either bought or built a balance sheet in similar fashion.

[The Wall Street Skinny @thewallstskinny]

Ever since we incorporated hand drawn diagrams into our content, we've heard it all:

"Your videos are AI"
"You're ripping off another creator"
"Slow down, this is moving too fast"

The truth is it's this instead.

We love finding new ways to share information with you in a way that jives with the way our brains work. We've been drawing together since we were 7 years old…over 35 years (don’t do the math), taking obsessive notes in engineering & organic chemistry classes in college, diagramming yield curves on the back of napkins for new analysts since before the Global Financial Crisis, and doodling on projector screens while teaching new hire analysts & associates at Blackstone and Goldman Sachs since before Instagram was invented.

If you're new here, welcome!

We love making complex concepts across finance, business, and tech easier to understand. Drawing is just one of those ways. And we do it all ourselves. 🥂

[The Wall Street Skinny @thewallstskinny]

Breaking news...we just put a video out about OpenAI’s $500 billion data center with NVIDIA’s backing.

This morning it was reported NVIDIA may now only back half the project.

Watch if you want to understand the latest development in the plans for one of the world's the biggest Al data center yet...

[The Wall Street Skinny @thewallstskinny]

This video maps the entire Al stack and shows exactly how and why Leo Aschenbrenner of Situational Awareness expressed his trade the way he did.

Here's the full thing in under 3 minutes.

[The Wall Street Skinny @thewallstskinny]

It’s also wild the piece led with Reese Witherspoon...she's the true PE boyfriend in the relationship 💀. She sold a majority stake of her media biz to Blackstone.

[The Wall Street Skinny @thewallstskinny]

Per the @WSJ, “the summers hottest arm candy is a Private Equity boyfriend”.

Can someone explain how this is different from any other summer???

Tons of celebs have Wall Street "boyfriends", husbands...am I missing something??

[The Wall Street Skinny @thewallstskinny]

SpaceX announced earnings today, August 4th: they beat. That's not the interesting part.

Here is what you need to know about the timing of the share unlocks AND Nasdaq rebalancing.

[The Wall Street Skinny @thewallstskinny]

Did anyone else realize that @nvidia chips are all named after legendary scientists? And many, including the newest model, ARE WOMEN?!

Apparently their latest model --- the "Rubin" --- is named after Vera Rubin, an American astronomer whose observations of galaxy rotation in the 1970s provided the first strong evidence that dark matter exists.

We’ve gone down the rabbit hole researching our next video on the semiconductor trade (the same one that blew up Situational Awareness), which has resulted in a deep dive into Nvidia’s supply chain and their chips.