Arm shares jump by 25% on first day of trading

News

Receive free Arm Ltd updates

Shares in SoftBank-backed chipmaker Arm jumped by 10 per cent as it began trading on the Nasdaq exchange on Thursday.

Arm opened at $56.10 per share on Thursday afternoon, significantly above the $51 offer price agreed on Wednesday evening. The price gave the chipmaker a market capitalisation of $57bn based on shares outstanding, or nearly $60bn on a fully diluted basis.

The IPO raised almost $5bn for SoftBank, making it the largest US listing in almost two years.

The strong reception will fuel confidence in the wider IPO market, which has been gradually reopening after one of the worst fundraising downturns in decades.

“Inferring that just because Arm can come and do a good IPO . . . does that mean everyone can do it? Probably not. But are conditions improving? Yes,” said one banker involved in the deal.

Grocery delivery app Instacart and marketing software group Klaviyo are expected to provide a further test of investor appetite next week.

A large first-day “pop” for a new listing can be disappointing for company executives and existing shareholders, as it highlights they could have raised more cash in the initial offering.

The $51 offer price was at the top of Arm’s announced price range. Bankers discussed pricing the deal even higher given the strong demand.

However, several people involved in the listing have said SoftBank and its chief executive Masayoshi Son were more concerned with ensuring the stock trades well than maximising their initial payout.

“This is going to be their biggest asset going forward, so every decision they make should be around protecting the value of the 90 per cent [of Arm that SoftBank still owns], not optimising the value of the 10,” said one person who worked on the deal.

Articles You May Like

States eye green bonds, superfund and cap-and-invest programs to fund resilient infrastructure needs
‘Sigh of relief’: Wall Street welcomes Trump’s pick of Bessent for Treasury
Longtime municipal bond banker George Joseph McLiney, Jr. dies at 87
Ceasefire deal reached in Israel-Lebanon war
Northvolt chief resigns a day after battery maker collapses into bankruptcy