🧑🎓Follow these steps if you want to buy shares in the ARM after their IPO:
This guide will explain how to buy ARM shares on the NASDAQ after their IPO and what to watch out for.
- Open an investment account with a stock broker that offers access to the NASDAQ where Arm shares are traded, like Hargreaves Lansdown, AJ Bell or Interactive Investor.
- You will need to fund your brokerage account before being able to trade ARM shares.
- Search for the ARM symbol on the platform
- Enter the amount of ARM shares you would like to buy. Platforms like eToro actually let you do this as a monetary figure rather than having to calculate the amount of shares.
- Click buy if you think they are going to go up or go short if you think Arm shares are going to go down.
🤔Note: ARM Volatility
As a newly listed tech stock, ARM shares are likely to be volatile. If you are buying ARM shares as a long-term investment, this is not quite so relevant as trying to time the market is not as important as time in the market. However, is you are trading ARM shares in the short term, be extra vigilant for excessive price moves.
⚠️What to watch out for! IPO Hype
Many tech stocks are massively overvalued when they come to the stock market for the first time (or in ARM’s case the second time, they used to be listed in London). This is so that private investors can get out at the highest price possible and means that overexcited private investors sometimes overpay for shares initially.
- Related Guide: How to invest in IPOs
How much do ARM shares cost?
Todays ARM share price is $122.22 (as of 16/04/2024 16:00) which is a change of 0.1 or 0.08% from the last closing price of 122.22 with 4,071,531 shares traded giving NASDAQ:ARM a market capitalisation of $125,651,327,754. The most recent daily high has been 124.24 and daily low 120.91. The NASDAQ:ARM share price 52 week high has been 164 and the 52 week low 46.5. Based on the most recent NASDAQ:ARM share price opening of 122.22, the current NASDAQ:ARM EPS (earnings per share) are n/a and the PE (price earnings ratio) is n/a.
The ARM IPO
ARM first came to market (for the second time) on the 14th September, the anticipated valuation for Arm had been lowered to $52 billion. This was lower than the earlier projections which gave ARM a potential valuation as high as $70 billion. Arm’s potential market cap also fell below the recent $64 billion price at which SoftBank, the company’s owner, recently acquired a stake.
What are Arm’s major share holders?
The chip design powerhouse Arm Holdings IPO’d in New York, in one of the largest listings seen since the pandemic, but who actually owns the shares that are not in the free float?
Arm’s current owner Japanese technology and venture cap manager SoftBank will spin out the Cambridge-based business after a sale to US chip maker Nvidia (who bid $66 billion for the firm) was finally thwarted by competition authorities last year.
Arm was originally part of pc pioneer Acorn Computer and became a separate business in 1990.
Arm does not make silicon chips itself rather it designs chip sets which are then licensed and manufactured by third parties.
Arm’s designs account for more than 250 billion chips which are present in many devices we use on a day-to-day basis, including around 95% of smartphones.
Softbank will try to IPO Arm with a valuation of $60.0 billion or more, and the roadshow to prospective investors will begin in early September, after the US Labor Day holiday.
It’s unclear exactly what the investor appetite for Arm will be.
How have semiconductor stocks performed this year?
Semiconductor stocks, as measured by the PHLX Semiconductor Index (SOX), have risen by more than +40% year to date.
However, those gains have largely been driven by Nvidia and the hyperbole around artificial intelligence. Away from that niche, the performance has been more pedestrian.
Taiwan Semiconductor, one of the foundries which manufacture chips for Arm’s end customers, is up +22.0% year to date. However, its share price has fallen by -5.44% over the last month.
Who will advise SoftBank on the Arm IPO?
Softbank has lined up Goldman Sachs, Barclays, JP Morgan and Mizuho as advisers on the IPO they will be supported by another 24 banks and brokers.
The question is will investors pay what looks like a rich valuation for Arm, when many believe that the broad chip sector is at the top of the cycle, with additional manufacturing capacity expected to come on stream in the next 5 years?
What about Arm’s earnings and valuation?
SoftBank acquired Arm in 2016 for £24 billion, paying £17.00 per share, a 43% premium to its share price prior to the bid.
SoftBank recently valued the business at $64.0 billion.
According to the IPO prospectus Arm had revenues of $2.70 billion for the 12 months to March 31st, down -1.0% year over year. Whilst net profits for the period fell by -5% to $524 million. Arm expects the chip market to grow by +6.8% per annum until 2025.
What else should I know?
Softbank has held talks with major tech groups such as Amazon, Intel and Nvidia about becoming key shareholders in the business, but it’s unclear what their response to the idea has been.
Arm is significantly reliant on a subsidiary business, Arm China, over which it has no management rights and just a 4.8% equity stake. Relations between the two businesses soured as SoftBank tried to oust the Arm China CEO in a two-year battle.
The IPO of Arm will certainly test the US IPO market which has been in a malaise during 2023.
As to whether Arm shares will be a good investment let’s not forget that GPU and AI giant Nvidia was prepared more than the current valuation to own Arm.
That, and the fact that Arm has a thirty track record as a business should underpin the valuation. However, the cyclicality in the chip sector shouldn’t be ignored.
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