It is literally not real money. It is the value of shares that anthropic owes to its lenders. In the event its market value crashes, so does the majority of that debt.
These notes can eventually convert into company shares.
Anthropic’s valuation increases dramatically.
The value of the investors’ conversion rights increases too.
Accounting rules require Anthropic to recognise that increase as an expense.
In other words, Anthropic’s rising valuation can actually create a reported accounting loss.
An important distinction: This is not necessarily money leaving Anthropic’s bank account. It is a non-cash accounting adjustment reflecting the increased value of financial obligations tied to future shares.
Think of it this way:
You borrow money and agree that the lender can convert the debt into shares in your business.
Your business becomes much more valuable. Those conversion rights become more valuable to the lender.
You now have a larger accounting liability, even though you haven’t paid the lender anything extra in cash.
That’s broadly what happened.
I’ve been providing actual information. Would you care to explain why this is a bad thing for anthropic and how this might lead to their bankruptcy? Or are we just here to echo chamber?
I think things are bad because Anthropic posted an over 100bn net loss per GAAP accounting standards. I think GAAP is cool because if you lie about anything that GAAP covers you go to jail. But maybe accountants didn’t know what they were doing when they agreeing upon those rules. Idk, man, maybe this company is just wildly unprofitable and the biggest missalocation of resources in the history of mankind?
It is literally not real money. It is the value of shares that anthropic owes to its lenders. In the event its market value crashes, so does the majority of that debt.
So derivative instruments are not real? You need to tell that to Lehman Brothers accountants. You could have prevented 2008 GFC! xD
I’ve been providing actual information. Would you care to explain why this is a bad thing for anthropic and how this might lead to their bankruptcy? Or are we just here to echo chamber?
I think things are bad because Anthropic posted an over 100bn net loss per GAAP accounting standards. I think GAAP is cool because if you lie about anything that GAAP covers you go to jail. But maybe accountants didn’t know what they were doing when they agreeing upon those rules. Idk, man, maybe this company is just wildly unprofitable and the biggest missalocation of resources in the history of mankind?
Gotcha. Echo chamber it is then.
Accountant echo chamber is my idea of fun times when it comes to responsible finance.