Chip Designer Arm’s IPO Could Revive The Dead Market… If We’re Lucky.

Chip Designer Arm’s IPO Could Revive The Dead Market… If We’re Lucky.
Daniel Johnston

4 months ago1 min

The initial public offering (IPO) market has been dry as dust for the last 18 months, as you can tell from the chart. Mind you, that’s hardly surprising with interest rates hikes and recessionary threats lurking around every corner.

Arm’s ready to breathe some life into the market. The chip designer’s much-anticipated listing should puff up the paltry $14 billion that’s been raised on US exchanges so far this year. But without any promise that today’s market-stalling problems are resolving, it looks like the listing’s unlikely to revive the market more broadly – especially as Arm’s in a better position than most hopefuls, with billions in sales and those hyped-up irons in the AI fire.

What’s more, investors are still cautious after getting their fingers burnt by the IPO boom of 2020 and 2021. Not only are some swerving companies that don’t have sturdy balance sheets and profitability, a bad sign for cash-seeking late-stage startups, they’re demanding cheaper prices too. Case in point: a survey by investment giant KKR showed that almost half of investors would need IPO candidates to have valuations 20 to 30% lower than those of their already listed peers before they would even consider investing. So sure, Arm’s IPO will likely be this year’s standout listing. But if you’re expecting the floodgates of fresh listings to open, you might be waiting a while.



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