What’s going on here?
British chip designer Arm had investors agog, with a hulking stock market debut.
What does this mean?
The grapevine’s long been abuzz about Arm’s stock market launch, with whispers questioning both the timing and investor hunger. But lo and behold, Arm’s gone and silenced the skeptics. Not only did its shares end up pricing at the top of the marketed range, but the debut also ranked as the US’s biggest since Rivian’s sizable 2021 splash. And the wins didn’t end there. Once the trading bell rang, retail investors, hungry for a slice of the AI pie, helped drive the shares skyward. It’ll come as no surprise, then, if Arm’s dazzling debut turns out to be the green light other companies have been waiting for – triggering a flurry of public listings in the coming months.
Why should I care?
For markets: SoftBank’s soft approach.
SoftBank, which still holds a whopping 90% of Arm, has had a spotty record with stock market debuts in recent years – and the firm desperately needed this win. So this time, the Japanese company opted for caution. By playing it cool and not jacking up Arm’s share price, despite the investor clamor, SoftBank ensured a sizzling first-day trading pop. And even though that gambit meant the firm probably left around $100 million on the table, it seems the stratagem has more than paid off for SoftBank.
The bigger picture: Stay tuned.
Arm’s successful debut was just the first hurdle. Now, it’s under pressure to accelerate growth, a feat investors are already banking on given its impressive valuation. But it’s not going to be a walk in the park: after all, its revenue dipped last fiscal year. And Arm’s not as firmly entrenched in the AI revolution as it would probably like to be, while the smartphone market, its mainstay, is shrinking.