Arm Holdings (ARM:NSD), the renowned British chip designer, made an impressive entry into the American financial arena on September 14. Its American Depository Shares (ADS) debuted on the NSD stock exchange. ARM stock witnessed a remarkable 25% surge in share price on its very first trading day. It closed at a resounding $63.59.
The positive momentum continued in after-hours trading, painting a rosy picture for this tech heavyweight. This highly anticipated event saw Arm’s 95.5 Million shares entering the market with an initial public offering (IPO) price of $51 per ADS.
A Strong Opening for Softbank-Backed Arm:
Backed by the Japanese conglomerate Softbank (SFTBY:OTC), Arm Holdings opened its trading journey on a high note, with shares starting at $56.10. This remarkable debut catapulted the valuation of ARM stock to a staggering $65 Billion. The successful launch of this year’s most awaited IPO has undoubtedly reignited investor enthusiasm.
The substantial listing price further highlights the revived appetite for IPOs, which had remained relatively subdued during most of the post-pandemic period. This resurgence could potentially bode well for the upcoming IPOs of companies such as grocery-delivery firm Instacart and marketing-automation platform Klaviyo.
Arm’s Splash in the IPO Waters:
Arm Holdings is a prominent player in the semiconductor industry and one of the leading global chip designers. It has attracted significant attention primarily due to the ongoing artificial intelligence (AI) frenzy. Arm’s cutting-edge designs power a multitude of devices, including smartphone chips, automobiles, and data centers. The bullish outlook on ARM stock is evident in its recent statement, forecasting the total addressable market (TAM) for chip designs to reach an impressive $250 Billion by 2025.
Currently, Softbank holds a substantial 90.6% stake in Arm Holdings and maintains a positive outlook on the share price, anticipating extraordinary growth in the future. In its initial listing, the Japanese conglomerate, led by the visionary Masayoshi Son, made a substantial $4.87 Billion by selling a minority stake in Arm.
Simultaneously, Arm also made a strategic move by selling $735 Million worth of shares to influential clients, including tech giants like Apple (AAPL:NSD), Alphabet (GOOG:NSD) (GOOGL:NSD), Nvidia (NVDA:NSD), Intel (INTC:NSD), and Taiwan Semiconductor (TSM:NSD), among others.
ARM Stock: Analyst Insights
Before Arm’s IPO, two analysts weighed in with differing views on the ARM stock. Pierre Ferragu, an analyst at New Street, bestowed a Buy rating on Arm with a price target of $59. This suggests a modest 7.2% downside potential.
Ferragu commended Arm’s timing for the IPO, noting that it occurred during a period of relative weakness in the smartphone market. He envisions Arm reaching a valuation of $82 Billion by 2026. Hence, demonstrating robust growth prospects. Ferragu also expressed confidence in Arm’s consistent financial performance. Moreover, he showed belief in its potential to capitalize on the burgeoning semiconductor market.
Conversely, Charles Shi, an analyst at Needham, was more cautious, assigning a Hold rating to ARM stock. He refrained from setting a specific price target. Shi’s apprehension stems from the belief that the semiconductor market is evolving towards high-performance computing and the Internet of Things (IoT).
He anticipates intense competition in this space Moreover, he emphasizes that relying on smartphone chips may not drive a significantly higher valuation for Arm Holdings.
ARM Stock Forecast:
With these contrasting viewpoints, ARM stock garners a “Buy” consensus rating. The analysts view the stock as very bullish. The average Arm Holdings price target of USD 59 indicates a 7.2% downside potential from its current valuation. (ARM:NSD) has a current price of USD 63.59.
In Conclusion
Arm Holdings’ spectacular debut on the NSD stock exchange signifies a resounding success for the British chip designer. The impressive 25% surge in share price reflects strong investor confidence and sets a positive tone for future market developments. While the future holds uncertainties, Arm Holdings’ remarkable IPO is undoubtedly a noteworthy event in the world of technology and finance. Hence, attracting attention from both seasoned investors and tech enthusiasts alike.
