Arm Holdings has begun trading on the Nasdaq with the ticker symbol "ARM." The firm, involved in chip design, is priced at a significantly higher value compared to the rest of the semiconductor industry. SoftBank still owns around 90% of Arm's stock.
Arm Holdings, the chip design company owned by SoftBank, rose by almost 25% on its first day of trading on Thursday, after offering shares at $51 apiece in its IPO. With a valuation of nearly $60 billion, the public company's ticker symbol was "ARM" and the sale included roughly 95.5 million shares. Since SoftBank took Arm private in 2016, it holds 90% of the outstanding stock.
On Wednesday, Arm had listed the stock at the high end of the expected range, and Thursday it opened at $56.10, closing at $63.59. This gives Arm a market capitalization of $60 billion, with a price-to-earnings ratio of over 110, which is on par with Nvidia's 108 times earnings- multiple, although Nvidia is projected to see a 170% growth rate for the current quarter.
When speaking to CNBC, Arm's Chief Financial Officer Jason Child commented that the company is concentrating on increasing royalty revenue and providing its customers with more cost-efficient products.
Around half of Arm's annual royalty revenue of $1.68 billion in 2022 originated from products launched in the period from 1990 to 2012. As the CFO explained jokingly, these products have become rather like the Beatles catalog; continually generating royalty payments. Arm is predicting that its chip design market will be worth approximately $250 billion by 2025, due to an increased demand for chip designs for data centers and automobiles. In the most recent financial year, their income decreased slightly (by under one percent) to $2.68 billion.Arm's architecture is employed by the majority of smartphone chips to outline the fundamentals of a processor, including conducting arithmetic operations and accessing computer memory. To keep a variety of shareholders, Arm sold $735 million worth of shares to 12 strategic investors which included Apple, Google, and Samsung. This move demonstrates the influence that Arm's technology has over other chip companies, who depend on them for chip design and production. SoftBank's CEO, Masayoshi Son, highlighted Arm's involvement in AI and machine learning when speaking to CNBC, and expressed a desire to hold onto their remaining Arm stake for as long as possible. The company's IPO is the biggest technology offering of 2023, and could spark a revival in technology IPOs which have been dormant since the beginning of 2021.
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