In a significant milestone for the IPO market, UK-based chip designer Arm has made a triumphant entry onto the Nasdaq exchange, marking the most substantial public offering since 2021. After nearly two years of drought in the IPO landscape, Arm’s debut on Thursday garnered substantial investor enthusiasm, closing the day with a remarkable 25% increase in stock price and a market capitalization of approximately $65 billion.
Trading commenced in New York on Thursday afternoon, with 95.5 million shares trading under the ticker symbol ‘ARM’ (ARM). The opening price of $56 per share already represented a 10% increase over its initial offering price, ultimately closing at $63.59. This robust start positions Arm’s IPO as the largest of the year and the most significant since electric truck manufacturer Rivian in 2021.
Investors welcomed the news with enthusiasm, as the Dow surged by more than 330 points on Thursday, marking its strongest performance since August. SoftBank, the conglomerate that acquired Arm for $32 billion in 2016, will maintain ownership of approximately 90% of the company’s shares.
While Arm may not be a household name for many Americans, its products play a ubiquitous role in daily life. Tech giants like Apple, Samsung, Nvidia, and Google rely on Arm’s designs and instructions to create their chips, making the company indispensable in the production of smartphones, laptops, video games, televisions, and GPS devices.
Notably, prominent companies such as Apple, Google, Nvidia, AMD, Samsung, and TSMC have expressed interest in becoming cornerstone investors in Arm’s offering, according to a filing from last week.
Arm CEO Rene Haas expressed satisfaction with the day’s events, stating, “We’re very happy about today. It’s a great day for the company… Our bankers say if you can price at the high end of the range and go out of that number, it’s a good thing. That’s where we ended up, and we couldn’t be more pleased.” The IPO of Arm is being viewed on Wall Street as a potential precursor for several tech companies waiting to go public, particularly as dealmaking has been at its lowest levels in over a decade, primarily due to recessionary concerns and elevated interest rates.
Goldman Sachs reported a 20% decline in its investment banking revenue in the second quarter of 2023, with an overall profit drop of 58% compared to the previous year, down to $1.2 billion. Goldman Sachs CEO David Solomon highlighted, “Activity levels in many areas of investment banking hover near decade-long lows, and clients largely maintained a ‘risk-off’ posture over the course of the quarter,” reflecting heightened caution in an uncertain economic environment among clients.