Arm Holdings saw a 6% surge in shares at market open on Friday, although the gains tapered off in its second day of trading on Nasdaq following its IPO debut on Thursday.
During the market open, the British chip designer’s shares were valued at just over $67, giving it a market capitalization of over $72 billion. Arm’s shares had reached even higher levels during premarket trading, but some of those gains were pared back.
This comes after Arm’s shares had surged nearly 25% on its first day of trading. The IPO had initially priced Arm’s shares at $51 each, valuing the company at around $54.5 billion.
Despite facing growth headwinds, Arm continues to trade at a premium compared to chip giant Nvidia. The valuation has raised concerns among some analysts.
“The pricing is expensive… a lot of investors are observing from the sidelines and waiting to see how they execute on those drivers,” said Ben Barringer, equity research analyst at Quilter Cheviot, on CNBC’s “Squawk Box Europe.”
SoftBank acquired 10% of Arm, keeping 90% stake in the company, according to reports.
SoftBank’s investment strategy and the significant loss posted by its Vision Fund tech investment arm in the previous fiscal year have made some investors wary of participating in the Arm IPO.
Portfolio manager William de Gale from BlueBox Asset Management revealed that he chose not to invest in Arm due to concerns about corporate governance and SoftBank’s asset allocation track record.
“We decided to watch from the sidelines for a bit and observe how the company operates as an independent business,” de Gale told CNBC’s “Street Signs Europe.”
Despite such concerns, there was high demand for Arm shares, with reports suggesting the IPO was multiple times oversubscribed.
In addition to Apple and Nvidia, strategic investors in the IPO, Arm’s chip architecture being present in 99% of the world’s smartphones helped attract investors.
This week, attention has been focused on the risks associated with Arm, including its exposure to the Chinese market and increasing competition from a rival semiconductor architecture supported by some of Arm’s largest customers.
Arm CEO Rene Haas reassured investors by stating that the company’s China business is performing well, with significant growth opportunities in data center and automotive applications.
While Arm has traditionally excelled in the smartphone and consumer electronics sectors, it is now exploring new areas such as artificial intelligence to drive further growth.
“We have diversified our business and are experiencing substantial growth in the cloud data center and automotive sectors,” Hass said.
Denial of responsibility! Vigour Times is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
