Arm Shares Surge on Nasdaq Debut

Shares rise by around a quarter on full day's trading in New York

Jocelyn Jovene 15 September, 2023 | 8:43AM
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Arm Holdings

Arm Holdings (ARM) has successfully completed its first trading session for its return to the stock market, with shares jumping from the initial price of $51 to $63.59, a near 25% rise.

More than 130 million shares changed hands during this session, or nearly 13% of the capital. Arm has a market capitalisation of $60 billion.

According to Factset consensus data, the stock trades on an earnings per share multiple of 86 times for fiscal 2023 and 66 times for 2024 – making it one of the most expensive stocks in the semiconductor industry.

For comparison, Nvidia (NVDA), the most prominent stock in the sector on the stock market, trades on multiples of 43 and 27 times respectively.

Supported by a large banking consortium and a limited quantity of securities offered (approximately 10% of capital), Arm Holdings opened at $56.10 after the start of trading on the Nasdaq, where the company is listed.

In addition to strong demand, the stock undoubtedly also benefited from the announcement before the listing of a stake of around 15% from several semiconductor manufacturers and foundries, all of which use the circuits designed by Arm to produce their own electronic components.

Among these shareholders are TSMC, the world's largest founder and one of the largest chip manufacturers on behalf of clients like Nvidia and AMD, which have also acquired Arm shares.

This flotation, which is the biggest of the year in the United States, is not the most remarkable.

Oddity Tech, a company operating in the cosmetics market, saw its share price soar by 36% during its first trading session on July 19.

The success of Arm Holdings' placement, against the backdrop of a US economy which is still not in recession despite interest rates at record levels, could open the door to other IPOs in the weeks to come. come, like that of the German sandal manufacturer Birkenstock, which also chose the New York Stock Exchange or the company Instacart.

According to the Wall Street Journal, the latter would consider raising its IPO price, which should take place next week, after the success encountered by Arm.

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About Author

Jocelyn Jovene

Jocelyn Jovene  is Senior Financial Analyst and Senior Editor for Morningstar France.

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