Damodaran Explains Pricing Methods for Young Growth Companies, Using Anthropic and OpenAI as Examples
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Valuation scholar Aswath Damodaran published a blog post explaining why young growth companies typically use unconventional metrics for pricing, rather than traditional intrinsic valuation methods based on earnings, book value, or cash flow. He analyzed Anthropic and OpenAI as case studies: Anthropic disclosed Q3 revenue of $16.8 billion, up 45% quarter-over-quarter, with an annualized revenue run rate (ARR) of $67 billion, and projected ARR to exceed $100 billion by year-end; its May 2026 venture round raised $65 billion, reaching a post-money valuation of $965 billion. OpenAI, meanwhile, adjusted its ARR calculation methodology, revising the figure down from $70 billion to $50 billion, while Anthropic still uses the gross revenue basis, counting payments from cloud service providers as expenses.
AI-generated from reports · 57 min agoUpdated
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- Aswath Damodaran：Musings on MarketsFeaturedFrom Website Page Views to Annual Revenue Run Rate: Popular Pricing Metrics and Anthropic's Pre-IPO Pricing Analysis
Damodaran combines the information disclosed at Anthropic's pre-IPO investor meeting—Q3 revenue of $16.8 billion, 45% sequential quarterly growth, an annual revenue run rate (ARR) of $67 billion, and an expected ARR exceeding $100 billion by year-end—to analyze why young growth companies often use non-traditional metrics for pricing instead of traditional intrinsic valuation.
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