{"id":60846,"date":"2023-09-14T07:55:40","date_gmt":"2023-09-14T11:55:40","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/arm-ipo-separating-the-hype-from-the-reality\/"},"modified":"2023-09-14T07:55:42","modified_gmt":"2023-09-14T11:55:42","slug":"arm-ipo-separating-the-hype-from-the-reality","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=60846","title":{"rendered":"Arm IPO: Separating the hype from the reality"},"content":{"rendered":"
\n

Arm Holdings\u2019 much-anticipated initial public offering is set to be the biggest IPO since electric-vehicle maker Rivian Automotive went public in 2021, raising $11.9 billion. So what should investors expect?<\/p>\n

The Arm IPO is set to be massive, with the offering valuing\u00a0the company at more than $50 billion on a fully diluted basis. Arm priced its offering at $51 a share late Wednesday, raising $4.87 billion and putting the company at a $55.5 billion valuation. Arm\u2019s previously stated targeted range was $47 to $51.<\/p>\n

\n

The chip designer, which was founded in 1990, has been firmly in the spotlight for decades. With a list of partners that reads like a who\u2019s who of global tech heavyweights, Arm has fueled the mobile-device revolution with its designs. The U.K.-based company is also a key player in the transition to artificial intelligence.<\/p>\n

Related:<\/strong> Arm prices IPO at high end of range, raising $4.87 billion<\/p>\n

\u201cIt\u2019s easy to get caught up in the hype of an IPO \u2014 especially when a company of this size goes public in a sector that is trendy,\u201d Jeff Zell, senior research analyst at IPO Boutique, told MarketWatch. \u201cBecause there has been such a limited amount of IPOs over the last two years, there could be an even added buzz from Arm.\u201d<\/p>\n

In a filing with the Securities and Exchange Commission last month, Arm cited a host of tech giants, including Apple Inc.
\n AAPL,
\n -1.19%<\/bg-quote>,<\/span>
\n Intel Corp.
\n INTC,
\n -0.39%<\/bg-quote>,<\/span>
\n Nvidia Corp.
\n NVDA,
\n +1.37%<\/bg-quote>,<\/span>
\n Advanced Micro Devices Inc.
\n AMD,
\n +2.28%<\/bg-quote>,<\/span>
\n Samsung Electronics Co.
\n 005930,
\n +1.13%<\/bg-quote>
\n and Alphabet Inc.\u2019s
\n GOOGL,
\n +1.01%<\/bg-quote><\/p>\n

GOOG,
\n +1.05%<\/bg-quote>
\n Google International LLC as \u201ccornerstone investors\u201d\u00a0in the IPO.<\/p>\n

\u201cAfter such a hiatus in the IPO market, \u2018walking before we run\u2019 is a prudent strategy,\u201d Zell told MarketWatch. \u201cArm Holdings has been able to secure critical cornerstone investors and has continued strong momentum with key investors during the roadshow \u2014 all critical ingredients to a successful IPO.\u201d<\/p>\n

Arm IPO:<\/strong> 5 things to know about the chip designer central to the AI transition <\/p>\n

The analyst noted that for the IPO market to be truly healthy, an IPO like Arm\u2019s needs to trade well not only on its first day, but in its first few quarters. \u201cFrom a valuation perspective, IPO investors can digest the story and have shown an eagerness to be involved,\u201d he said. \u201cWe believe an outcome above the prevailing $47-$51 range is not only possible but likely. With this continued strength, we see a strong first-day performance from Arm Holdings as a likely result.\u201d<\/p>\n

But the Arm IPO has also generated some skepticism, with independent equity research firm New Constructs warning this week that the valuation is disconnected from the chip giant\u2019s fundamentals.<\/p>\n

David Morrison, senior market analyst at Trade Nation, also urged retail investors to exercise caution. \u201cOften the hype surrounding a new issue leads to wild price swings, particularly on the first couple of days trading. This leads to the danger of paying too much for the stock. Far better to wait for the initial flurry to die down and then assess investor sentiment,\u201d he told MarketWatch.<\/p>\n

Tech\u2019s wild week:<\/strong>\u00a0How Apple, Google, AI, Arm\u2019s mega IPO could set the agenda for years <\/p>\n

\u201cBear in mind that the company selling the stock \u2014 in Arm\u2019s case, Japanese investment bank Softbank
\n 9984,
\n -0.75%<\/bg-quote>
\n \u2014 has its own specific reasons for selling,\u201d Morrison added. \u201cOne of these is to raise money following [Softbank\u2019s] disastrous investment in WeWork and others.\u201d<\/p>\n

Last month, beleaguered office-sharing company WeWork Inc.
\n WE,
\n -10.45%<\/bg-quote>
\n flagged \u201csubstantial doubt\u201d about its ability to stay in business. The company\u2019s survival depends on the successful execution of a plan to improve liquidity and profitability over the next 12 months, it said. Earlier this month, WeWork announced that it is renegotiating all its global leases in an attempt to rein in costs.<\/p>\n

Trade Nation\u2019s Morrison also highlighted current market conditions. \u201cSure, the Nasdaq 100 is up 47% since its October 2022 low, but U.S. interest rates are at their highest level since 2001,\u201d he said. \u201cIn addition, if history provides us with any lesson, the Federal Reserve is only likely to start cutting rates once unemployment skyrockets, or once we\u2019re in the depths of a recession.\u201d<\/p>\n

Related:<\/strong> Investors should avoid Arm IPO, New Constructs says <\/p>\n

He added: \u201cPerhaps this isn\u2019t the best time to take out large bets on a chip designer \u2014 note: not a manufacturer like Nvidia
\n NVDA,
\n +1.37%<\/bg-quote>
\n \u2014 heavily reliant on intellectual property.\u201d <\/p>\n

Wallace Witkowski, Emily Bary and Ciara Linnane contributed.<\/em><\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Arm Holdings\u2019 much-anticipated initial public offering is set to be the biggest IPO since electric-vehicle maker Rivian Automotive went public in 2021, raising $11.9 billion. So what should investors expect? The Arm IPO is set to be massive, with the offering valuing\u00a0the company at more than $50 billion on a fully diluted basis. Arm priced […]<\/p>\n","protected":false},"author":1,"featured_media":53530,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-60846","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\nArm IPO: Separating the hype from the reality | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Arm Holdings\u2019 much-anticipated initial public offering is set to be the biggest IPO since electric-vehicle maker Rivian Automotive went public in 2021,\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/ifintechworld.com\/?p=60846\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta 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