'IPO Daeeo' Arm, 24.7%↑ on Nasdaq Listing First Day (Summary)

Arm, a British semiconductor design company regarded as a major player in the U.S. initial public offering (IPO) market this second half of the year, made a spectacular debut on its first day of listing on Nasdaq on the 14th (local time). The stock price rose by double digits compared to the offering price, pushing the market capitalization beyond $65 billion. This is seen as a revival signal for the IPO market, which had been frozen due to concerns about an economic downturn and the Federal Reserve's (Fed) aggressive tightening measures.

[Image source=Reuters Yonhap News]

On that day, Arm’s stock price on Nasdaq closed at $63.59 per share, up 24.69% from the offering price of $51. The market capitalization based on the closing price exceeded $65 billion. Local media reported that the fully diluted valuation was around $68 billion. This is the largest scale on the New York Stock Exchange since electric vehicle maker Rivian’s $13.7 billion IPO in 2021. The market had anticipated a valuation range of $45 billion to $50 billion ahead of the listing, and the $64 billion valuation set when SoftBank purchased a 25% stake in Arm from the Saudi Arabia Vision Fund was also surpassed. SoftBank, led by Chairman Masayoshi Son, acquired Arm in 2016 for $32 billion.

Investors showed strong interest in Arm, the highly anticipated IPO, as soon as trading began that day. The stock opened at $56.10 per share, 10% above the offering price, and within less than 30 minutes, the price had risen more than 20%. Arm’s CEO Rene Haas expressed his delight in an interview with foreign media, saying, "This is a very good result. Everyone is satisfied." He called the day "truly amazing" and emphasized the company’s future value by stating, "The next 5 to 10 years are much more exciting. Arm has diversified to apply its technology to numerous products with a certain level of computing power, including automobiles, consumer products, and data centers."

Arm is recognized as a leader in the mobile application processor (AP) sector used in smartphones. Most mobile APs produced by Samsung Electronics, Apple, Qualcomm, and others use Arm’s basic design. This dominant position, combined with the excitement surrounding the artificial intelligence (AI) boom, is credited with driving the IPO’s success.

SoftBank, which owns all of Arm’s shares, sold about 10% of its stake in this IPO, successfully raising approximately $5 billion. Ten major IT companies, including Samsung Electronics, AMD, Apple, Cadence, Google, Intel, MediaTek, Nvidia, Synopsys, and TSMC, participated as cornerstone investors. Most of these are Arm’s largest customers. In an interview with CNBC, SoftBank Chairman Masayoshi Son highlighted how Arm’s technology is used in AI chips and also sought to boost the stock price. He stated that SoftBank wants to hold onto its stake in Arm for as long as possible.

The Wall Street Journal (WSJ) reported, "Not only investors but also companies preparing for IPOs and Wall Street firms earning huge fees from IPOs breathed a sigh of relief," calling it "a signal of the IPO market’s revival." The New York Times (NYT) described it as "Wall Street’s Groundhog Day, the day of awakening from winter slumber."

[Image source=EPA Yonhap News]

The strong interest surrounding Arm is expected to have a positive effect on companies waiting in the IPO queue, such as grocery delivery company Instacart and marketing automation platform Klaviyo, which are scheduled to set their offering prices next week. German shoe manufacturer Birkenstock and Vietnam-based internet startup VNG are also preparing for U.S. listings.

Ross Gerber, founder of asset management firm Gerber Kawasaki, told Bloomberg News that this marks "the beginning of a cycle" and expressed optimism, calling Arm "a great signal for what’s to come." Matt Maley, strategist at Miller Tabak, said, "(Arm’s IPO) could be much more important than people think," adding, "Arm’s success will help revive the IPO market, which has been stagnant for over a year."

The New York stock market also benefited from Arm’s IPO success that day. The Nasdaq Composite Index, which is tech-heavy, closed up 0.81% from the previous session. The Dow Jones Industrial Average and the S&P 500 also closed higher by 0.96% and 0.84%, respectively.

This content was produced with the assistance of AI translation services.