Arm Holdings IPO Raises $5 Billion with $54 Billion Valuation, Sets Bar for Tech Offerings in Uncertain Market, UK

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Arm Holdings, the British chip designer, has successfully raised $5 billion in its initial public offering (IPO), valuing the company at over $54 billion. The IPO saw Arm’s shares priced at $51, the top end of the expected range, and trading is set to begin during the US cash session. This IPO is expected to serve as a barometer for initial public tech offerings in an uncertain market.

The underwriters, which include Barclays, Goldman Sachs, JP Morgan, and Mizuho Securities USA, believe that leaving an additional $1 per share on the table could yield a bigger pop when the stock debuts on Nasdaq. They project that the stock could trade between $57 and $62 based on feedback from investors.

The overwhelming demand for Arm’s IPO is evident as the deal was more than 12 times oversubscribed. This IPO is the largest since electric truck maker Rivian debuted on the public markets in 2021 during the pandemic.

While the $54 billion valuation is 70% higher than what SoftBank paid for Arm in 2016, it is significantly less than the $64 billion valuation SoftBank paid just a month ago to purchase a quarter of the company’s shares from the Vision Fund.

Arm, which supplies chip makers with essential circuit designs, has been a dominant supplier in the handheld phone industry for the past three decades. However, the company is now betting on artificial intelligence and data centers due to the slowdown in the global smartphone industry.

In its prospectus, Arm stated that its revenue in the fiscal year ending in March slipped less than 1% from the prior year to $2.68 billion. Net income in fiscal 2023 also dropped 22% to $524 million.

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With a P/E multiple of about 104 based on the latest fiscal year’s profit, Arm’s valuation is just slightly below the exorbitant 108x multiple that Nvidia carries. Nvidia’s forecasted revenue growth of 170% for the current quarter, driven by AI chips, has led to its high valuation.

The success of Arm’s IPO will serve as an indicator of the overall health of the market. Market watchers will closely observe the trading of Arm’s shares to gauge investor sentiment and assess the state of the tech IPO space, which has experienced a slowdown due to soaring interest rates and inflation.

In conclusion, Arm Holdings has raised $5 billion through its highly oversubscribed IPO, valuing the company at over $54 billion. The strong trading expected on the stock’s debut will be a significant indicator for the tech IPO market, especially after a period of uncertainty and market volatility. Arm’s transition to focusing on artificial intelligence and data centers positions the company for future growth and potential success.

Frequently Asked Questions (FAQs) Related to the Above News

How much did Arm Holdings raise in its IPO?

Arm Holdings raised $5 billion in its initial public offering (IPO).

What is the valuation of Arm Holdings following its IPO?

The company is valued at over $54 billion after its IPO.

What was the price at which Arm's shares were priced for the IPO?

Arm's shares were priced at $51, the top end of the expected range.

Which underwriters were involved in Arm's IPO?

The underwriters for Arm's IPO include Barclays, Goldman Sachs, JP Morgan, and Mizuho Securities USA.

What is the projected trading range for Arm's shares based on feedback from investors?

The underwriters project that Arm's shares could trade between $57 and $62 based on feedback from investors.

How oversubscribed was Arm's IPO?

Arm's IPO was more than 12 times oversubscribed, indicating overwhelming demand.

How does Arm's $54 billion valuation compare to what SoftBank paid for the company in 2016?

Arm's $54 billion valuation is 70% higher than what SoftBank paid for the company in 2016.

What is Arm's current focus for future growth?

Arm is transitioning its focus to artificial intelligence and data centers due to the slowdown in the global smartphone industry.

How does Arm's valuation compare to Nvidia's?

Arm's valuation, with a P/E multiple of about 104, is just slightly below Nvidia's exorbitant multiple of 108x.

How will the success of Arm's IPO impact the overall market?

The success of Arm's IPO will serve as an indicator of the overall health of the market, particularly in the tech IPO space.

What factors have contributed to the slowdown in the tech IPO space?

The tech IPO space has experienced a slowdown due to soaring interest rates and inflation.

What does the transition to focusing on artificial intelligence and data centers mean for Arm's future prospects?

Arm's transition to focusing on artificial intelligence and data centers positions the company for potential growth and success in the future.

Please note that the FAQs provided on this page are based on the news article published. While we strive to provide accurate and up-to-date information, it is always recommended to consult relevant authorities or professionals before making any decisions or taking action based on the FAQs or the news article.

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