Brendan MacDiarmid – Reuters
Arm CEO Rene Haas and executives cheer as Softbank’s Arm, a chip design company, holds an initial public offering on September 14, 2023.
The biggest IPO since 2021 is here.
UK-based chip designer Arm made its debut on the Nasdaq on Thursday, trading at about $56 per share, or 10% above its initial offering price. This brings the company’s market value to approximately $60 billion.
Shares continued their rally in afternoon trading, rising 16%.
After a nearly two-year drought in the IPO market, AI kingmaker Arm began trading in New York on Thursday afternoon with 95.5 million shares under the symbol “ARM” (arm). Its strong opening marks the largest IPO this year — and the largest since electric truck maker Rivian in 2021.
SoftBank, which acquired Arm for $32 billion in 2016, will retain about 90% of the company’s shares.
While many Americans have probably never heard of Arm, most use the company’s products daily. apple (Camel), Samsung, Nvidia (NVDA) Google uses Arm designs and instructions to create its chips. The company is essential in the production of smartphones, laptops, video games, televisions and GPS units.
Companies including Apple, Google, Nvidia, AMD, Samsung and TSMC have expressed interest in serving as cornerstone investors in the offering, according to a filing last week.
Deal making has fallen to its lowest levels in more than a decade, as fears of a recession and rising interest rates dampen valuations. Wall Street views Arm’s listing as a weather balloon for a number of technology companies waiting to go public.
Goldman Sachs (A) reported this summer that its investment banking revenues fell 20% in the second quarter of 2023. Overall, profits this quarter fell 58% from a year ago, to $1.2 billion.
“Activity levels in many areas of investment banking are hovering near decade-lows, and clients have largely maintained a ‘risk off’ stance on… The course of this quarter. This means that customers are concerned about betting in an uncertain economic environment.
But experts say there are plenty of healthy companies waiting to make their public debut, but they don’t want to be the first to exit.
Arm’s successful debut could be the big IPO that sets the stage for the rest.
“This is a big deal,” said Dave Sekera, chief U.S. market strategist at Morningstar Research Services. “The big idea here for investors, even in the public markets, is that if this IPO is successful, it opens the door to a wave of new IPOs. This would provide positive market sentiment for the stock market overall.”
Goldman Sachs is the lead underwriter on the IPO. The bank’s shares rose about 2.6% on Thursday.
This story is evolving and will be updated.
“Infuriatingly humble alcohol fanatic. Unapologetic beer practitioner. Analyst.”