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Arm IPO: Everything you need to know

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Axi Team
Arm Holdings

British technology company Arm Holdings announced that it will go public on September 14th, 2023, on the Nasdaq in the year’s biggest IPO event.

Once described as ‘the jewel in the crown of British technology’, Arm Holdings was bought by Japan’s internet firm Soft Bank in 2016 in a $32 billion deal. In 2022, Nvidia attempted to buy Arm for around $40 billion, but both companies called off the sale because of significant regulatory challenges.

Nvidia’s attempt to buy Arm took place amid the global chip shortages crisis and the production slowdown caused by the COVID-19 pandemic. As a result, SoftBank decided to float Arm’s shares in 2023, initially planning a dual listing on New York’s Nasdaq alongside the London Stock Exchange.

 

Arm Holdings company stats

Founded 1990
Headquarters Cambridge, United Kingdom
Number of employees 7,170
Revenue 2021 $2.7 billion
Stock Exchange Nasdaq
Launch Date 14 September 2023
Potential Valuation $52 billion

Source: Reuters

 

How does Arm make money?

Arm Holdings specialises in chip architecture, meaning that they don’t simply manufacture microchips, they also design them. According to their website, about 70% of the world population uses Arm-based technology across all markets. This means that almost every internet user is exposed daily to a product built with Arm technology, including cars, smartphones, drones, and even electronic passports.

Moreover, the company has built a global ecosystem of innovators with more than 1,000 partners who have embedded more than 250 billion Arm-based chips in products. Arm has been a driving force in the semiconductor industry for more than 30 years and has offices in the UK, US, China, Japan, India, S. Korea, Taiwan, France, Germany, Sweden, and many other countries across Europe.

 

The IPO: When, where and what to expect

There has been a lot of speculation among investors regarding the IPO launch date in 2023, the earliest being in March.

Arm Holdings eventually announced that it would open its doors to investors on September 14th, 2023, on the Nasdaq, in what is considered to be the year’s biggest market floatation.

At the beginning of September, Arm Holdings announced the launch of its IPO roadshow, meeting with a number of potential investors.

The company is now expecting to issue 95.5 million ADS at a price of $47 to $51 each. This would give Arm a valuation of up to $52 billion, lower than the initial target range of $60-70 billion. Despite concerns about the company´s high exposure to China and slower growth, it is still set to be the hottest IPO of the year as Arm aims to ride the AI wave.

Initially, SoftBank was targeting a valuation of $60 billion, which is almost double the amount it paid for it in 2016, according to Bloomberg. However, Arm’s revenue in 2022 was about $2.6 billion, making the company worth about $24 billion if investors value it at the average market capitalisation-to-revenue ratio of the Philadelphia Stock Exchange Semiconductor Index. Therefore, Arm’s IPO might not be as lucrative as its planned deal with Nvidia. Global investment banks are pitching valuations from $30 billion to $70 billion.

SoftBank’s decision to launch the IPO on the Nasdaq stock exchange was a move that could be seen as a lost opportunity for the UK tech industry. A UK listing could benefit the local economy and boost the stock market.

With Arm having a ‘near monopoly’ over parts of the market, the listing could be one of the hottest IPOs in 2023.

Nvidia to become an anchor investor in the Arm IPO?

Nvidia is in talks with Arm to take a long-term stake in the company at the time of its initial public offering as an anchor investor. The American multinational is seeking a share price that could value Arm at between $35bn and $40bn, according to the FT. This move comes nearly 18 months after Nvidia's bid to acquire Arm fell through.

This could lead to increased competition and innovation. Arm is a leading supplier of chip designs for smartphones, servers, and other devices, and its technology is also essential for many artificial intelligence applications. By investing in Arm, Nvidia could gain access to Arm's technology and customer base, which would give it a significant advantage over its rivals.

Apple, Amazon, and Samsung to become anchor investors as well?

Arm´s upcoming initial public offering - already set to be the biggest tech IPO since Alibaba - is heating up with Apple, Amazon, and Samsung looking to become anchor investors as well. The interest from these tech giants is a major vote of confidence and highlights Arm's significance in the sector. The IPO could raise as much as $10 billion, with a projected valuation of $60 to $70 billion. 

Amazon is one of Arm´s biggest customers, accounting for more than half of Arm-based server CPUs currently being used. Apple and Samsung are also major clients.

 

3 steps to trade Arm stock IPO with Axi

An Initial Public Offering (IPO) is an investor’s first chance to gain exposure to an organisation. An IPO is an important milestone for a company looking to raise capital and an opportunity for investors to get involved in a hopefully growing business.

With Axi you can get exposure to Arm Holdings IPO as soon as it’s listed on a specific exchange and prices from the exchange become available to our liquidity providers.

  1. Login to your live MT4 trading account (sign up with Axi if you don’t have one)
  2. Navigate to market watch, right-click, and select ‘show all’. Search for Arm Holdings.
  3. Choose your position and size and go long or short on share prices. Don’t forget to set risk management tools like a stop loss and take profit order.

 

Sources: Bloomberg

 

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The data is sourced from third-party providers. This information is not to be construed as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product, or instrument; or to participate in any trading strategy. It has been prepared without taking your objectives, financial situation, or needs into account. Any references to past performance and forecasts are not reliable indicators of future results. Axi makes no representation and assumes no liability regarding the accuracy and completeness of the content in this publication. Readers should seek their own advice.



Axi Team

Axi Team

The Axi team is full of people with decades of financial industry experience and knowledge of almost every aspect of trading. The Axi team blog, in addition to regular posts from our daily market analysis contributors, is a place to share wider insights and ideas. In this section, you’ll find posts about everything from forex education and helpful hints for new traders to product updates and important market announcements.


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