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Arm Holdings is quite accustomed to creating significant impact within the realm of investing. Back in 2020, Nvidia made an effort to acquire the company; however, this endeavour didn't succeed due to rigorous regulatory scrutiny. Although the name might ring a bell for tech investors, especially those engaged in the semiconductor sector, Arm might still remain unfamiliar to many. In this article we delve into what Arm Holdings is, everything we know about the IPO, how to buy into the IPO and much more. So, let's get right into it.
Arm Holdings, the British chipmaker that listed on the US Nasdaq last September, has seen its share price rise by more than 100% since then. However, in March the rally stalled, and so far, the stock price has fallen nearly 5% in the last four weeks.
There are a few reasons why the share price has come under pressure, and below we analyse whether this downturn is justified, and where the stock price could go next.
We think that there are three reasons for the recent weakness in Arm’s share price:
However, it is also worth noting that the sell-off in Arm’s share price is ignoring some other exciting developments within the company, as you can see below.
Arm is looking to expand beyond smartphones. For example, in March, Arm launched its first chip to power driverless cars. Their car market holds twin attractions for Arm: firstly, the electrification of cars and secondly the rise of driverless technology all require chip technology that Arm can deliver. The automotive chip market is worth approx. £20bn per year, and Arm is attempting to take market share. Currently, smartphones account for 35% of Arm’s royalty revenue, while automotive revenue is the smallest of its four main business units. However, Arm executives have called automotive chips one of the pillars of future growth, and they are investing a significant amount in this area of development. In the future, Arm is likely to have a more diversified revenue base than it does currently.
There are many benefits of Arm chips compared to their rivals. Firstly, they are more compact and energy efficient than chips provided by AMD and Intel. This is attractive when many companies and consumers are concerned about their carbon footprint.
Arm’s V9 architecture has been warmly welcomed, and increased adoption of its V9 architecture may drive double digit royalty revenue in future, according to some estimates. Continued innovation in design and production, especially in the Artificial Intelligence space of central processing units that Arm specialises in, bodes well for its future earnings reports. Thus, the high valuation for Arm’s stock could be justified.
Overall, Arm’s share price has come under pressure in recent weeks, as fears about the smartphone sector and a moderation in the rally for semiconductor stocks hit the share price. However, we believe that demand for Arm’s chips will remain strong for the foreseeable future and any weakness in the share price may be used as a buying opportunity.
Arm Holdings (ARM.US), UK-based chip and software designer, is one of the best performing Wall Street stocks today. Share price surges almost 60% after the company reported fiscal-Q3 2024 earnings yesterday after the close of the Wall Street session.
Company, which had IPO in 2023 and is still in 90% owned by SoftBank Group, reported much better-than-expected results for October - December 2023 period. Sales and profits turned out to be higher, while operating expenses were lower than expected. A strong free cash flow generation also highlights how successful the company was. Arm's executives said that its expansion beyond smartphone chips has been very successful, with smartphone-related products accounting for just a third of total sales. The company is expanding into data-center and automotive markets. Customers are using more and more chips from Arm Holdings per device and it helps fuel royalty revenue growth.
This positive outlook for the business translated into surprisingly bullish forecasts for fiscal-Q4 2024 and full fiscal-2024. This, in turn, is fuelling a massive share price gain during today's Wall Street session.
Fiscal-Q3 2024 earnings (October - December 2023)
Fiscal-Q4 2024 forecast (January - March 2024)
Full-year fiscal-2024 forecast (April 2023 - March 2024)
Arm Holdings (ARM.US) surges almost 60% today following the release of fiscal-Q3 2024 earnings. Stock trades over 100% above IPO price from mid-September 2023 ($51 per share). Source: xStation5
Please be aware that information and research based on historical data or performance does not guarantee future performance or results. Past performance is not necessarily indicative of future results, and any person acting on this information does so entirely at their own risk.
SoftBank's Arm Holdings (ARM.O) made a robust debut on the Nasdaq, achieving a valuation of nearly $60 billion, with the chip designer's shares surging 10% above their initial offer price on Thursday 14th September.
Its American Depositary Shares (ADS) began trading at $56.1 each, surpassing the initial public offering (IPO) price of $51, signaling optimism for other firms contemplating public listings.
Arm had priced its IPO at the upper boundary of the range, resulting in a valuation of $54.5 billion on Wednesday. This move generated $4.87 billion for SoftBank, which continues to hold a substantial 90.6% stake in the company.
You can now invest in Arm Holdings with zero percent commission here. *For monthly turnover up to 100,000 EUR (then comm. 0.2%, min. 10 EUR)
Arm, the chip designer owned by the Softbank Group, has the potential to achieve a valuation as substantial as $52 billion in its forthcoming initial public offering on the Nasdaq exchange, as indicated by an updated filing released on Tuesday.
Arm is closing in on securing the level of investor support required to achieve its fully diluted valuation target of $54.5 billion, as initially sought in its forthcoming initial public offering (IPO). People familiar with the matter revealed on Sunday that, given robust investor interest, Arm is now contemplating the possibility of requesting an even higher valuation from potential investors.
With strong demand from investors, Arm appears poised to price the IPO at or above the upper end of its previously indicated range of $47 to $51 per share. This development comes as the underwriters prepare to close their books on Wednesday, marking the most significant U.S. stock market debut in two years. In light of the IPO's oversubscription, Arm is engaged in discussions about potentially raising the price range, aiming for a valuation surpassing $54.5 billion, according to insider sources. Alternatively, Arm is considering maintaining the existing price range but pricing the IPO above that range on Wednesday, which would also result in a valuation exceeding $54.5 billion.
It's important to note that Arm does not intend to offer additional shares in the IPO, as SoftBank intends to maintain its planned 90.6% stake in Arm, even after the approximately $5 billion IPO, as per the original plan.
Arm Holdings is a British semiconductor company that designs microprocessors and other intellectual property (IP) for the computing, networking, and embedded markets. The company was founded in 1990 as a joint venture between Acorn Computers, Apple Computer (now Apple), and VLSI Technology and has since been acquired by SoftBank Group in 2016. Its designs are used by a wide range of companies, including Apple, Qualcomm, and Samsung.
Arm is planning to go public in the United States through an initial public offering (IPO) in early September 2023. The IPO is expected to be one of the largest of the year, with Arm reportedly seeking a valuation of up to $70 billion. The IPO is expected to take place on the Nasdaq stock exchange with Arm reportedly planning to sell between $8 billion and $10 billion of shares in the IPO.
ARM stands for "Advanced RISC Machines" and refers to a type of computer architecture that uses a simplified instruction set. This makes ARM processors more efficient and power-saving than other types of processors, such as x86.
The company's processors are used in a wide variety of devices, including smartphones, tablets, laptops, and embedded systems. Therefore, it is highly likely that any device you have used has utilised ARM's processor. They are also increasingly being used in servers and high-performance computing applications.
One of the unique features of ARM processors is that they are often integrated into a single chip, called a system-on-a-chip (SoC). This makes them ideal for small, portable devices where space and power consumption are at a premium.
Arm's chips are well-suited for AI applications, so if investor interest in AI is high, it could boost the demand for Arm shares. Arm is moving away from licensing its designs to chipmakers and towards selling its own chips. If Arm is successful in this transition, it could boost the value of the company.
According to Goldman Sachs Research, it is estimated AI investment could approach $100 billion in the U.S. and $200 billion globally by 2025.
A precise date has not yet been determined, however, early September is what has been reported for ARM’s IPO. Per the F-1 filing the date will be released “As soon as practicable after this registration statement becomes effective.”
ARM has not been listed on the stock market yet, however, you will be able to trade it the same way as any other stock on the market once it goes live.
If you have thoroughly researched and understand the company and its prospects and are interested in purchasing shares in the ARM IPO, here is what you should do:
Once the Arm IPO is announced, you will be able to place a stop order to buy shares. The price of the shares in the IPO will be determined by supply and demand, so it is impossible to say for sure how much they will cost. However, you can use your limit order to ensure that you do not pay more than you are willing to pay for shares in the company.
It is important to remember that investing in IPOs is a risky proposition. The price of shares in an IPO can be volatile, and there is no guarantee that you will make money. You should only invest in an IPO if you are comfortable with the risk involved. Don’t invest more than you can afford to lose.
In 2022, Arm Holdings generated $2.68 billion in revenue. Of this, $1.98 billion came from licensing its processor designs, $335 million came from selling software development tools, $230 million came from providing technical support, and $120 million came from selling other IP.
Arm Holdings' business model is unique in the semiconductor industry. Most semiconductor companies design and manufacture their own chips. Arm, on the other hand, focuses on designing processor designs and licensing them to other companies. This allows Arm to reach a wider market and generate more revenue.
Let's delve into the categories we mentioned above a bit more. Arm Holdings makes money through a variety of ways, including:
The Arm business model has been very successful. Arm Holdings is the world's leading semiconductor IP company, and its designs are used in billions of devices around the world. The company is well-positioned to continue to grow in the years to come, as the demand for energy-efficient processors continues to increase.
Arm Holdings is currently owned by SoftBank Group. SoftBank acquired Arm Holdings in 2016 for $32 billion. SoftBank Group is expected to retain a majority stake in the company after the IPO.
As of August 2023 SoftBank has a market cap of $66.82 Billion. This makes SoftBank the world's 233th most valuable company by market cap according to companiesmarketcap.com.
The market capitalisation, commonly called market cap, is the total market value of a publicly traded company's outstanding shares and is commonly used to measure how much a company is worth.
SoftBank Group Corp. is a Japanese multinational investment holding company headquartered in Minato, Tokyo, which focuses on investment management. The group primarily invests in companies operating in technology that offer goods and services to customers in a multitude of markets and industries ranging from the internet to automation. With over $100 billion in capital at its onset, SoftBank's Vision Fund is the world's largest technology-focused venture capital fund. Fund investors included sovereign wealth funds from countries in the Middle East.
SoftBank Corporation, its spun-out affiliate and former flagship business, is the third-largest wireless carrier in Japan, with 45.621 million subscribers as of March 2021.
SoftBank was founded in 1981 by Masayoshi Son, a Japanese entrepreneur. Son is known for his aggressive investment style and his willingness to take risks. SoftBank has invested in a wide variety of companies, including Alibaba Group, Uber, and WeWork.
SoftBank's investments have been both successful and unsuccessful. The company's investments in Alibaba and SoftBank Vision Fund have been very successful, generating billions of dollars in profit for SoftBank. However, SoftBank's investments in WeWork and other companies have been less successful, resulting in billions of dollars in losses for the company.
Despite its ups and downs, SoftBank remains one of the most active investors in the world. The company is well-positioned to continue to grow in the years to come, as the technology industry continues to expand.
Here are some of the key businesses under SoftBank Group:
The anchor investors in Arm's upcoming IPO are not yet publicly known. However, it is expected that some of the anchor investors will be major technology companies that use Arm's processor designs, such as Apple, Qualcomm, and Samsung.
Anchor investors are typically large institutional investors that commit to investing a significant amount of money in an IPO. They are often given preferential treatment, such as the ability to buy shares at a lower price than the public offering price.
The anchor investors in Arm's IPO are likely to play a key role in the success of the IPO. Their investment will signal to other investors that Arm is a valuable company, and it will help to ensure that the IPO is well-subscribed.
Here are some of the potential anchor investors for Arm's IPO:
These companies are all major users of Arm's processor designs, and they are likely to be interested in investing in the company. Their investment would be a vote of confidence in Arm, and it would help to ensure the success of the IPO.
Intel: Intel is a major American multinational corporation and technology company headquartered in Santa Clara, California. It is the world's largest semiconductor chipmaker by revenue. Intel designs and manufactures microprocessors, chipsets, motherboard chipsets, embedded processors, flash memory, graphic chips, network and communications chips, and other integrated circuits.
AMD: AMD is an American multinational semiconductor company based in Santa Clara, California. It develops computer processors and related technologies for both consumer and commercial markets. AMD competes with Intel in the microprocessor market.
RISC-V: RISC-V is an open-source instruction set architecture (ISA) for computer processors. It is a free ISA, which means that anyone can use it without paying royalties. RISC-V is a competitor to the ARM architecture, and it is gaining popularity in the embedded systems market.
Qualcomm: Qualcomm is an American multinational corporation headquartered in San Diego, California. It develops, manufactures, and markets wireless telecommunications products and services. Qualcomm is a major supplier of mobile phone processors, and it is a competitor to Arm in the mobile market.
MediaTek: MediaTek is a Taiwanese multinational fabless semiconductor company headquartered in Hsinchu, Taiwan. It designs and manufactures integrated circuits for consumer electronics, communications, and computing products. MediaTek is a major supplier of mobile phone processors, and it is a competitor to Arm in the mobile market.
However, Arm no longer has any significant competition in the smartphone chip space.
In the graphics processing unit (GPU) space, Arm faces competition from Nvidia, Qualcomm, and Intel. It’s important to note that these companies have mostly combined their proprietary GPUs with Arm-licensed designs.
The IPO hype surrounding Arm is due to a number of factors. First, Arm is a leading player in the semiconductor industry, and its designs are used in billions of devices around the world. Second, Arm is seen as a key player in the development of artificial intelligence (AI), as its chips are well-suited for AI applications. Third, the IPO market is currently strong, with investors eager to get in on the next big thing.
There are also some risks associated with the Arm IPO. First, the semiconductor industry is cyclical, and Arm's business could be affected by a downturn in the market. Second, Arm is facing increasing competition from rivals such as RISC-V. Third, Arm's business model is changing, as it is moving away from licensing its designs to chipmakers and towards selling its own chips.
Overall, the Arm IPO is a highly anticipated event, and it is likely to be one of the most closely watched IPOs of the year. The success of the IPO will depend on a number of factors, including the strength of the semiconductor market, the level of investor interest in AI, and Arm's ability to execute on its new business model.
The company is well-positioned to continue to grow in the years to come, as the demand for energy-efficient processors continues to increase.
The company's technology is used in more than 250 billion chips that have been shipped to date.Arm Holdings has more than 5,900 employees and operates in over 40 countries with the company's headquarters located in Cambridge, United Kingdom, but it also has offices in the United States, China, Japan, and other countries.
The Arm IPO is a significant event for the semiconductor industry, and it is likely to have a major impact on the market. The success of the IPO will depend on a number of factors, but it is clear that Arm is a major player in the industry, and its IPO is one of the most anticipated events of the year.
Arm Holdings is a British multinational semiconductor intellectual property (IP) company that designs microprocessors, graphics processing units (GPUs), physical IP, and system IP. Its products are used in a wide variety of electronic devices, including smartphones, tablets, laptops, servers, and networking equipment.
Arm Holdings is important because its products are used in a wide variety of electronic devices. Arm's CPUs are the most widely used CPUs in the world, and its GPUs are the most widely used GPUs in smartphones. Arm's products are also used in many other devices, such as tablets, laptops, servers, and networking equipment.
The future of Arm Holdings is bright. The company is well-positioned to continue to grow as the demand for its products increases. Arm is also investing in new technologies, such as artificial intelligence (AI) and machine learning, which are expected to drive future growth.
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