If you've been following the headlines, you know there's a lot of talk about the Arm IPO. SoftBank Group owns the company and designs some of the most important smartphone chips.
You're probably wondering, “when is the Arm IPO?” How will it happen? And how will it affect business?
Well, the good news is that the Softbank Chief is set to sign off on the Arm IPO listing on the Nasdaq this week! Read on to learn more.
Arm is a leading semiconductor intellectual property licensor, enabling many partners to create system-on-chip designs that include Arm technology.
Arm offers a comprehensive suite of robust processor and graphics intellectual property (IP), enabling customers to develop high-performance systems for the embedded, enterprise, mobile, and infrastructure markets.
Before diving into more about this well-known company, let's look at Arm's journey over the years.
We can trace the history of Arm back to 1990, when it started as a joint venture between Acorn Computers, Apple, and VLSI Technology.
Arm didn't always have this name. At first, its name was Advanced RISC Machines Ltd. The founders established it to provide low-power microprocessors for embedded systems.
Acorn contributed 12 workers, VLSI provided equipment, and Apple invested $3 million.
One crucial individual and the initial CEO of the joint company was Larry Tesler, the VP of Apple. The Acorn RISC Machine CPU, initially utilized in the Acorn Archimedes and chosen by Apple for their Newton project, was the focus of the new company's efforts to advance its development.
In 1993, Advanced RISC Machines Ltd had its first profitable year. In 1994, the business established headquarters in Silicon Valley and Tokyo.
In 1997, ARM invested in Palmchip Corporation to offer systems on chip platforms and join the disk drive industry. Most experts believe the company's success took off from this point.
A year later, ARM Ltd went public for the first time. SoftBank listed it on the NASDAQ and London Stock Exchange.
To create Linaro, a non-profit open-source engineering firm, ARM collaborated with several big names in 2010. These big businesses included IBM, Texas Instruments, Samsung, ST-Ericsson (since dissolved), Freescale Semiconductor, and NXP Semiconductors.
On July 18, 2016, the Japanese corporation SoftBank Group announced an accepted bid to buy Arm, resulting in a valuation of £24.3 billion ($32 billion). They sealed the deal on September 5, 2016.
In 2017, the Saudi sovereign fund invested in the SoftBank Vision Fund, which gained a 25% share in Arm.
René Haas, Arm’s current CEO, has been with the company for a decade. Before being named CEO, Rene spent seven years at Nvidia and has expertise in intellectual property.
Following the aforementioned unsuccessful purchase by Nvidia, they appointed Rene as CEO to increase Arm's growth as it prepares to re-enter the public markets.
With net sales up 40% each year to $2 billion, Arm is now seeing a significant increase in revenue. During the three months that ended on September 30, the business announced earnings of $463.2 million.
Arm owns a 47% ownership in a joint venture that accounts for 5% of worldwide revenues, yet CFO Inder Singh can't audit the business' accounts. This, of course, is a concern for many.
Because Arm doesn’t produce its chips, most of its income derives from licensing its designs through intellectual property agreements.
As far as I and many others are aware, Arm is a successful business. After all, the company is a top manufacturer of semiconductors that creates and licenses processor architectures and intellectual property (IP).
Manufacturers use these in several consumer gadgets, such as smartphones, tablets, and other mobile devices. Not to mention, Arm has consistently achieved strong financial results, with revenues and earnings rising steadily over the previous five years.
The corporation recorded £1.9 billion ($2.5 billion) in revenue. It also achieved a net profit of £689 million ($903 million) in 2022 alone.
The rise of ARM's other product and service offerings, together with the high demand for its CPU designs and intellectual property, were the main drivers of these results.
On September 13, 2020, the American tech company Nvidia revealed intentions to buy ARM from SoftBank for a price of $40 billion in stock and cash. This would’ve undoubtedly been the biggest semiconductor purchase we would ever see.
This deal, however, was called off for several reasons. First, there were challenges with competition, since Arm licenses mostly rely on firms like Google, Microsoft, and Qualcomm for their processors.
There were also security concerns in the United Kingdom, and objections from Arm's Chinese affiliate.
When the Nvidia agreement fell through at the start of 2022, SoftBank opted to go public with Arm. The Japanese company sought to make money from assets that may make up for losses in its venture capital sector.
Masayoshi Son, founder and CEO of SoftBank, has a lot of confidence that he's the right person to help Arm achieve its growth goals and conduct a successful IPO.
According to sources close to the situation Masayoshi Son, the Softbank Chief, is set to sign off on the Nasdaq listing this week.
This puts any rumours of a dual listing on the NASDAQ/LSE to bed. There is no sign of a London listing in the future.
In its vast history, Arm has already gone public before. In 1998, the business went public, and SoftBank listed it on the Nasdaq and London Stock Exchange.
After 18 years of being traded in the open markets, SoftBank bought Arm in 2016.
Now they have decided to list again, and the valuation could be between $30bn and $70bn; we will have to see the financial information when it is released to the public to decide for ourselves.
It will most likely be Goldman Sachs, JP Morgan and Mizuho Securities that will underwrite the Arm IPO and help to bring us a fair valutaion.
Other information, like the first stock price, the stock symbol, and valuation statistics, hasn’t yet been made public.
Because Arm stock is not currently accessible from any market, the only option to invest in the semiconductor business is to purchase shares of its parent company, SoftBank. but you may wish to wait for the real thing, given that an Arm IPO is imminent.
Once public, you can purchase Arm stock. To purchase Arm stock, you must first create a brokerage account with a financial institution that permits you to trade equities.
Following that, you'll be able to use your brokerage account to purchase ARM stock.
It's crucial to remember that purchasing stocks comes with its own set of risks. Therefore, stock market investment needs to be done carefully.
To know whether purchasing Arm stock matches your investment goals and risk tolerance, conduct your research and speak with a financial advisor.
Therefore, I believe knowing about an IPO in advance provides you, as an investor, time to gather as much information as you can about the company. This will undoubtedly help you decide whether to purchase Arm stock before the IPO date.
Sign up to Etoro as they will make the Arm stock available to you as soon as possible.
If you are in the US you can register for the Arm IPO here and you will be informed once it is available.
For the UK or the rest of the World apart from India and Canada register for Arm stock here.
For India and Canada register with Switchmarkets here for the best chance of picking up Arm stock early.
You must sign up and deposit to fully cativate your account, then you will be able to register for Arm IPO stock.
There's not much information on what the Arm share price will be. This is because the price depends on several factors.
But what do all these factors mean? And how will they affect the price of Arm stock?
Well, the factors that determine a company's stock price are too complicated to be boiled down to one thing, but some common themes run through all of them, including:
During the agreement with NVIDIA, Arm's valuation was $80 billion. Yet, investors expect the firm would be worth $40 billion following the Arm IPO. As you can see, that's less than half of what it was worth in 2021.
The transaction price was closely similar to NVIDIA's stock price because SoftBank would purchase a 10% interest in the American company.
The acquisition was initially worth $40 billion. Because of the worldwide chip scarcity, however, Arm's valuation and NVIDIA's share price increased.
Even yet, it's improbable that the firm will be worth anything close to this price on the open markets. Arm has not released its financial details, but according to the FT the valuation will be between $30bn and $70bn.
Many reasons point to Arm continuing to perform well in the future.
First, as the need for electronics and linked devices rises, we predict the semiconductor sector to expand.
Because of the widespread use of Arm's processor architectures and intellectual property (IP), this trend is expected to be helpful for the company.
Second, Arm has a distinct edge because of its business strategy of licensing its intellectual property rather than producing its processors. Why is that, you ask?
The company can get consistent revenue from its licensing while avoiding the expenses and hazards of chip fabrication.
Last, Arm has a competitive advantage in the industry thanks to its long history of innovation and substantial product line. After all, manufacturers have developed several technologies thanks to Arm's efforts!
As you would do with any investment, it's critical to weigh both the risks and rewards. As much as Arm's future is looking bright, there are still a few possible risks you should consider.
Let’s look at the main ones.
The revenues of Arm depend on a few major customers, notably in the smartphone sector.
This implies that any changes in these consumers' demands might have a major effect on the company's ability to generate revenue.
Arm works in a highly competitive sector, where it is up against existing semiconductor businesses as well as new entrants with cutting-edge technology.
As a result, the company's market share and price could be under strain.
Since ARM depends on its intellectual property for its operations, it may be subject to legal action about its patents or other IP. This could result in pricey legal disputes and affect the business's earnings. Also it may not of course, but it is a risk worth considering.
You may be wondering when Arm will launch its IPO. Investors are in a very similar position. There isn't an IPO date, yet!
Although Softbank is set to sign off on the Arm IPO, it's important to remember that this is just one milestone in the company's long history.
As investors, we must keep in mind that shares of Arm are likely to be volatile until they reach a more stable level after the IPO. But it has to be said that this stock will be very popular with investors Globally.
The information in this article is well-researched and factual. Still, it contains opinions also, and IT IS NOT FINANCIAL ADVICE and should not be interpreted as such, do not make any financial decisions based on the information in this article; we are not financial advisors. We are journalists. You should always consult with a professional before making any investment decisions. We hold no stock or interests in any of the Companies discussed on this website/app.
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