Arm, the largest IPO of the year, explodes 17% in first day of trading

Investing

British chip designer Arm went public Thursday, becoming the largest company to do so in 22 months and enjoying a 25% surge in its share price in the first session after its initial public offering went live.
Chip Manufacturer Arm Goes Public With IPO On Nasdaq

Arm CEO Rene Haas rings the Nasdaq opening bell at the Nasdaq on Thursday.

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Key Takeaways
  • Shares of Arm hit $56 within minutes immediately after trading opened shortly after 12 p.m. Eastern time, up about 10% from its initial public offering of $51 per share.
  • Within 15 minutes, Arm stock soared to $60, a 17% gain, settling there for much of the afternoon before staging a late gain to $63.59, a near 25% jump on the day.
  • Opening at a $54.5 billion valuation, Arm’s market capitalisation jumped to over $65 billion.
  • The tech-heavy Nasdaq composite notched a modest 0.7% gain, in line with the S&P 500.
Key Background

Arm designs, but does not manufacture, chips for technology companies like Nvidia, Alphabet and Apple, generating revenue via licensing and royalty fees. Founded in 1990, the company is headquartered in Cambridge, England.

Arm was previously a publicly traded company, going private in 2016 after Japan’s SoftBank acquired the company for $32 billion. SoftBank still has a 90% stake in the firm. Arm’s listing revives a slumping IPO market which just registered its quietest year in over a decade after 2021’s record deluge.

Several of the most notable IPOs during the 2020-21 boom have suffered significant stock losses as good times ran out, including an 82% decline for shares of electric vehicle maker Rivian since its blockbuster debut.

Surprising Fact

Nvidia actually agreed to buy Arm from SoftBank for $40 billion in September 2020, with Nvidia’s billionaire CEO Jensen Huang touting the proposed entity as “fabulously positioned for the age of AI.” Alas, the companies called off their merger last February following regulatory scrutiny.

What To Watch For

How other high-profile IPOs perform in coming weeks. Grocery delivery service Instacart is expected to go live on the Nasdaq on Tuesday at an up to $9.3 billion valuation, while automated marketing firm Klaviyo will start trading on the New York Stock Exchange on Wednesday at an up to $8.4 billion valuation.

This article was first published on forbes.com and all figures are in USD.

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