ARM IPO: What to Expect and Should You Buy ARM Shares Immediately After the IPO?

In the world of technology, there are several key players that shape the modern industry. One such company is ARM, a British developer of microprocessor architecture that serves as the foundation for most mobile devices. An important event awaits this company, namely an Initial Public Offering (IPO) – the first sale of stock to the public. ARM’s IPO is scheduled for September 13th and is the largest offering since 2021.

ARM’s IPO has already been named the largest offering since 2021. ARM managed to surpass the amount raised by Rivian, a company that raised $12 billion in its IPO in 2021. However, the fact that the share offering has been reduced from 25% to 10% is causing concern and doubts among some investors.

According to documents filed with the Securities and Exchange Commission (SEC), ARM plans to raise $4.87 billion. The company’s estimated market capitalization will be $52.3 billion. Several major corporations, such as Apple, Google (a subsidiary of Alphabet), Intel, TSMC, AMD, and Nvidia, are ready to purchase shares totaling $735 million. It’s worth noting that last year Nvidia’s $66 billion acquisition of ARM was rejected by antitrust regulators.

However, there are several factors that are causing concern among potential investors. Firstly, the company’s valuation multiples are quite high. According to the financial year ending in March, ARM generated revenue of $2.7 billion and net income of $520 million. The P/S ratio is 19.4x, and the P/E ratio is 99.8x.

Secondly, after the failed deal with Nvidia, one of ARM’s major investors, Softbank, decided to cash out its stake. This decision raises questions, as it could be expected that Softbank would hold onto the shares in anticipation of further growth in the company, particularly in relation to artificial intelligence and other technologies. However, Softbank chose to cash out its stake at the peak of investor interest in such companies. This may indicate that the peak of interest could be ending, especially if a market correction occurs.

Thirdly, only 10% of ARM’s shares will be freely tradable, with a significant portion of them being bought by strategic investors who expect long-term growth in the shares. This situation limits the availability of shares to the general public and may impact their potential value.

Is it worth buying ARM shares at the start after the IPO?

In conclusion, ARM shares are of interest to long-term investors, especially in light of the company’s plans to increase chip development for artificial intelligence and computers. It is also worth noting the interest in ARM from major players such as Apple, Google, Intel, TSMC, AMD, and Nvidia, who are ready to acquire part of the shares for a total of $735 million. This indicates that the company has potential for further development and attracts the attention of leading technology giants. Only 10% of ARM shares will be freely available, with a significant portion being bought by strategic investors who expect long-term stock growth. This situation limits the availability of shares to the general public and may impact their potential value. The company’s valuation multiples are quite high. According to the financial year ending in March, ARM generated revenue of $2.7 billion and net profit of $0.52 billion. The P/S ratio is 19.4x, and the P/E ratio is 99.8x. Potential investors should pay attention to Softbank’s decision to sell its stake in ARM. This could indicate that the peak of interest in technology companies may come to an end, especially in the event of a market correction, which some experts expect. Therefore, investors should carefully consider all factors and risks associated with the ARM IPO before deciding to purchase shares.