The placement of the shares on the Nasdaq stock exchange in the USA brought no surprises from the perspective of Arm’s company valuations. With an offer price of $ 51 per share, which coincided with the upper limit of the range, Arm’s capitalization reached $ 54.5 billion, which is not bad both for the current market conditions and according to the multiples known to stock market experts.
Image source: Bloomberg
With this result, Arm’s IPO risks becoming the largest this year. As planned, around 90% of the shares in the British developer of processor architectures are in the hands of the Japanese group SoftBank, which bought Arm’s assets from the British stock exchange in 2016 for $32 billion. Taking into account the commissions of the banks involved in the IPO and other costs, SoftBank is expected to earn less than $5 billion from the IPO.
The IPO resulted in the placement of 95.5 million Arm depository receipts priced at $51 per share, which will begin trading today on Nasdaq under the symbol ARM. Subscribers retain the right to purchase an additional 7 million depositary receipts. It is not yet clear whether Arm’s key customers, TSMC and Intel, which openly expressed their intention to become investors in the company, have realized their intention to participate in the IPO. In total, it planned to distribute shares worth $735 million to Arm’s strategic investors.
Arm closed the previous fiscal year ending in March with revenue of $2.68 billion, down 1% sequentially, and net income fell 22% to $524 million. 104, which is pretty good in modern times. This figure in the technology sector is higher only for NVIDIA, in this case reaching 108, but this company is now attracting investors with the potential for strong revenue growth on the wave of interest in artificial intelligence.
Arm’s prospects in this area are not so clear. Management, of course, tried to convince investors that the company’s strategy had been restructured taking into account the latest market trends, stating that the capacity of this segment would reach $ 250 billion by 2025, but analysts from NewStreet Research have has already started recommending Arm shares for purchase and predicts that they will reach the exchange rate of $59 each. According to experts, Arm has shown stable financial performance over the past seven years, and now its revenue will begin to grow due to an increased presence in new market segments. According to representatives of the analysis company, Arm’s capitalization will reach $82 billion by 2026. Arm’s profit before taxes could triple by then.
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