After the largest IPO in almost two years, shares of AI chip Designer Arm soar by 25%

This is the biggest initial public offering since 2021.

The UK-based chip designer Arm made a triumphant Nasdaq debut on Thursday, ending the day 25% higher and giving the business a market worth of over $65 billion after nearly two years without an IPO.

The company began trading in New York on Thursday afternoon with 95.5 million shares trading under the ticker ‘ARM’ (ARM). Trading started at $56 per share, which was already 10% more than the offering price, and ended at $63.59.

The robust opening represents the biggest initial public offering of the year and the biggest since Rivian, a manufacturer of electric trucks, in 2021.

Investors rejoiced at the news, and the Dow rose more than 330 points on Thursday, recording its highest day since August.

About 90% of the shares of Arm will remain in the hands of SoftBank, which purchased the company in 2016 for $32 billion.

Though most Americans probably haven’t heard of Arm, they frequently utilize the company’s goods. Arm’s designs and instructions are used by Apple (AAPL), Samsung, Nvidia (NVDA), and Google to make their chips. The company is crucial to the creation of GPS devices, smartphones, laptops, video games, and televisions.

According to a document from last week, businesses like Apple, Google, Nvidia, AMD, Samsung, and TSMC have expressed interest in serving as cornerstone investors in the offering.

On Thursday afternoon, Arm CEO Rene Haas told CNN’s Richard Quest, we’re really thrilled with today. The business climate today is excellent. Our bankers believe that setting prices at the top of the range and deviating from them is a good thing. That is where we ended up, and we are quite happy about it.

Opening the pipeline

A lot of IT businesses that are waiting to go public see Arm’s offering as a weather balloon, according to Wall Street.

This summer, Goldman Sachs (GS) announced a 20% decrease in second-quarter 2023 revenue from investment banking. Overall, the quarter’s profit of $1.2 billion decreased by 58% from the same period last year.

According to Goldman Sachs CEO David Solomon, during a recent earnings call, “clients essentially maintained a ‘risk off’ stance over the course of the quarter, and activity levels in several sectors of investment banking hover near decade-long lows. This indicates that customers are concerned about placing bets in a volatile economic climate.

However, according to analysts, there are a lot of healthy companies ready to go public; they simply don’t want to be the first ones out.

If Arm makes a good launch, it might be the major IPO that opens the door for the others.

Dave Sekera, chief US market strategist at Morningstar Research Services, declared, “This is a big deal.” The key lesson here for investors, even in the free markets, is that if this IPO is a success, it will pave the way for a torrent of further IPOs. The general stock market would experience a good market mood as a result.

The IPO’s principal underwriter is Goldman Sachs. On Thursday, the bank’s stock ended approximately 2.9% higher.

Credits: edition.cnn.com

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ARM IPO: The Year’s Largest Initial Public Offering Is Expected to Be a Hit for the Stock Market