After a seven-year absence from the stock market, chip designer Arm returned to Wall Street with fireworks on Thursday. The company’s shares first appeared on the American technology exchange Nasdaq at $56.10, ten percent above the issue price.
“Anything else would be a big surprise,” said investment strategist Jürgen Molnar of brokerage firm RoboMarkets. Because the company benefits from the hype surrounding artificial intelligence. Looking ahead, analyst Konstantin Oldenburger of online broker CMC Markets said risks for investors were manageable. After all, Arm had almost twenty years of experience in the stock market until it was fully acquired by the technology investor Softbank in 2016. However, he warned against excessive expectations. “The stock market’s top contenders over the past five years have often risen in the first few days of trading, but are now trading well below their issue prices.”
Arm had allocated 95.5 million securities at $51 each, at the high end of the offering range of $47 to $51. With an issuance volume of $4.87 billion (approximately €4.54 billion), it is the largest IPO of the year so far. At the issue price, Arm was valued at $54.5 billion.
According to insiders, the issue was twelve times oversubscribed and a higher allotment price would be justified. However, experts from the accompanying banks advised Softbank boss Masayoshi Son against this to increase the chance of strong subscription profits. Softbank also decided not to sell a larger stake in the chip designer than the previously offered stake of 9.4 percent.
IPO after failed sale to Nvidia
Almost all smartphone chips are based on the company’s designs. But they are also increasingly used in processors for data centers. Numerous technology companies have therefore subscribed to Arm papers to ensure further collaboration.
Arm was founded 33 years ago as a joint venture between Acorn Computers, Apple and VLSI Technology. The company, based in Cambridge, UK, was listed on the stock exchange from 1998 to 2016 – then in London and on the Nasdaq – before Softbank acquired it for $32 billion. Last year, Arm’s planned $40 billion sale to chip company Nvidia failed
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
