Arm stocks plummeted

The company designs products that are the foundation of modern semiconductors, and Arm designs are used in about half of the world's chips. An increasingly digital world guarantees more chip demand and means more arm royalties.But even though stock prices have been sluggish recently, are stock prices already too high?

Arm is developing a semiconductor architecture, which is the basic design of a chip. Whenever a company manufactures a chip based on an arm's design, the company earns a small fee or royalty. This is a high-profit business model with a gross profit margin in the latter half of the 90% range.

Management anticipates that the business will generate revenue of approximately $3.1 billion this year and be in surplus. According to analysts' predictions, this year's profit per share is about 1.20 dollars, and the stock price will be about 69 times the expected profit for 2024.

This is the stock price. Is that a good value for investors? To that end, it is necessary to look at Arm's growth prospects.

The company reported changes in market share in various end markets during its public offering. This is important because investors can expect future profit growth if the arm obtains a large slice of the chip pie, especially if that pie (chip market) grows.