Now is SK Telecom’s Short Time in the Sun
In May, I shocked the world when I revealed SK Telecom $SKM was handing out free stakes in Anthropic. Well, the world would have been shocked if they read it...
The percentage of Anthropic on $SKM’s market cap is far greater than any other proxy.
The only way to invest in pre-IPO Anthropic shares is through a listed investor proxy. Google, Amazon and even Zoom’ stakes are dwarfed by the rest of the business’s value by comparison.
For pure Anthropic exposure, it is SKM 0.00%↑ first and the rest nowhere.
In August 2023, $SKM invested $100M into Anthropic’s Series C, at a $5B valuation. They were a mere $7.5B staid Korean telco then. Today their market cap is $15B.
With Anthropic’s S-1 imminent, my prior analysis deserves a little refresh.
As a preview, I can assure you that SK Telecom handing out free stakes in Anthropic is as factually correct today as it was in May.
The ADR closed on Friday 5 September at $38.70.
Then and Now
Q2 duly reported and EBITDA duly improved as I probably should have foreseen because PY last year was the aftermath of a data leak.
Investments had some sales, some more additions, but net-net, same.
The real re-appraisal is that the AI Data Centres business is a material change to my calculation. The sale of 49% to KKR was announced (though not closed) allowing us to mark-to-market the stake, increasing the previous mark by $1.5B. Nice.
Finally, the Korean Won has been on a tear, making the previous ~1,500 to the dollar calculation one of mental arithmetic, and the current 1,351 to the dollar one requiring a calculator. But it is favourable to the ADR dollar valuation.
So $54.90 of the company has nothing to do with Anthropic, and the shares are $38.70. That gap was 18% in May. 42% now.
What Price Anthropic?
I plan to do a deep dive into the bull case for Anthropic shortly. Subscribe away if you might be interseted…
$SKM followed on in the Series H round, as such, should have broadly maintained their 0.54% stake. A lot of the financing that surrounded Anthropic has been somewhat vague in its structure of debt versus convertible shares, etc. Time will tell exactly what this stake is. Financial commentary remains divided. The IPO price will of course reflect any debt.
In particular, SKM invested $100M at the $5B mark, and the 0.54% above is predicated on that being 2%. However, SKM investments have a penchant for downside protection, so we don’t know what equity % that $100M translated into. Time will answer this one.
The Full SOTP
Anthropic’s valuation and the ADR with the $54.90 of everything else added on: I vacillated on a Korean HoldCo discount previously. I discounted the Anthropic stake by 25% last time. I’ll leave that for you to add on if you think it is merit-worthy. There is no certain consensus on this matter.
Pick your row.
Gavin Baker says $3T.
The betting on Polymarket (which is of course flawed, but it is a market data point) shows an expected value of $2.2 trillion for Anthropic’s IPO closing market cap.
That implies fair value for the ADR of $85.88. 122% upside.
Disclaimer: To state the obvious, I am long $SKM. DYOR.