Arm shares rise 25 on first day of trading
Hardware

Arm shares rise 25% on first day of trading

Developer of the Arm processor architecture goes public Nasdaq. And we can say with confidence that the IPO was successful – the company’s securities rose by 25% in the first trading session.

When it went public, Arm was valued at a cap of $54.5 billion and the price per share was set at $51. Even in preliminary trading, the share price rose by around 10% to $56.1. The rally continued and even strengthened throughout the trading session, resulting in Arm ending its first day of trading at $63.59 per share. Capitalization was $67.9 billion.

The company, which trades under the ticker symbol “ARM,” has issued about 95.5 million shares on the stock market. SoftBank, which acquired Arm in 2016, retained control of 90.6% of the shares and earned $4.9 billion from the IPO. Investors who bought large stakes in Arm include Apple, Google, NVIDIA, Samsung, AMD, Intel, Cadence, Synopsis and TSMC. Together they invested $735 million, and demand was even higher.

It was also noted that Arm will demonstrate good value for money. At a valuation of $60 billion, Arm’s price-to-earnings ratio would be more than 110, based on the company’s earnings in its most recent fiscal year. In comparison, NVIDIA’s estimate is 108, although this number does not take into account the 170% growth forecast for the current quarter.

Arm CFO Jason Child told CNBC that the company is focused on increasing royalties and offering its customers products that cost more but do more. Arm gets a significant portion of its royalties from products that came to market decades ago – about half of its licensing revenue, which amounted to $1.68 billion in 2022, comes from products released between 1990 and 2012 market came.

As a CFO, I believe this is one of the best business models. I sometimes joke that these old products are like the Beatles catalog: they continue to bring in royalties. Some of these products are already three decades old“said the child.

In a presentation to investors before the IPO, Arm said the total market for Arm chips would grow to $250 billion by 2025, including through developments in cars and data centers. The Arm architecture is used in almost all smartphone chips and is actively implemented in automotive, data centers, AI and other areas.

About the author

Dylan Harris

Dylan Harris is fascinated by tests and reviews of computer hardware.

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