A glossary to help understand what happens in an initial public offering

An initial public offering (IPO) is a company's first sale of shares to the public. This marks the first time a company's value is determined by a public market. Before an IPO, the company prepares and submits a formal offer, often called an S-1 after the Securities and Exchange Commission form. This document includes details about the company's finances, operations, and the ticker symbol for the stock, as well as the public exchange where it will be traded.

An underwriter is a financial institution that acts as an intermediary between the company and investors during an IPO. They purchase the stock being issued by the company and sell it to the public, often sharing the risk. For Anthropic's IPO, the lead underwriters are Goldman Sachs and Morgan Stanley.

Before shares are publicly traded, executives, insiders, and early investors are typically prohibited from selling their shares for a certain period, known as a lockup period. This duration usually ranges from 90 to 180 days and aims to prevent insiders from cashing out or selling their shares quickly. For Anthropic, directors, officers, and holders of "substantially" all of its capital stock have agreed to a 180-day lockup period, while co-founders and certain stockholders have agreed to a 365-day lockup.

An IPO involves an estimated price range for the shares being offered before the stock is publicly traded. Investors submit bids within this range, and the final listing price is determined based on the demand and potential supply of shares. Anthropic set a price range for its IPO between $70 and $78. The IPO process aims to balance the demand for the stock with the potential supply of shares, and the time required for this process can vary depending on the level of interest from potential investors.