The biggest IPO of the year is coming! Arm surged nearly 25% on the first day of listing, with a market capitalization exceeding US$65 billion

$Arm Holdings(ARM.US)$ Arm opened up 10% to $56.10. At one point, the intraday increase reached about 30%. Arm shares rose 24.69% to $63.59 by the close. The sharp rise on Thursday increased the value of Arm shares held by SoftBank by about 12 billion US dollars.
The high-profile Arm IPO finally officially debuted on Thursday EST!
On the first day of the US IPO, Arm opened up 10% to $56.10. At one point, the intraday increase reached about 30%. At the close, Arm's stock price rose 24.69% to $63.59. At the closing price, the market value was US$65.248 billion. Including restricted stock units, Arm's valuation after complete dilution was close to US$68 billion.
After the market on Wednesday, Arm set the issue price of the IPO stock at 51 US dollars per share, which is at the top of the issue price guidance range of 47 to 51 US dollars. The valuation calculated at this price is 54.5 billion US dollars. Due to strong demand, Arm's current US IPO subscription ended one day early on Tuesday, September 12. $Arm Holdings(ARM.US)$ In this IPO, 95.5 million ADS shares were issued to raise 4.87 billion US dollars.

Arm's major customers — including $Apple(AAPL.US)$ 、 $NVIDIA(NVDA.US)$ , AMD, Google, Intel, MediaTek, TSMC, Synopsys, Cadence Design, Samsung Electronics, etc. are the cornerstone investors of this launch. The IPO has set aside more than $700 million in shares for them.

Last month, SoftBank unexpectedly bought 25% of Arm's shares from its Vision Fund. The deal valued Arm at $64 billion, significantly higher than the $54.5 billion valuation given by Arm's offering price. According to people close to Sun Zhengyi, Sun Zhengyi's idea is that Arm's valuation at the beginning of US stock trading may not be as important as the listing itself. According to reports, at the final pricing meeting on Wednesday, some bankers proposed pricing Arm shares higher than $51, but Sun Zhengyi said it was not worth risking damaging a healthy initial launch in order to obtain an additional $100 million in funding.

Arm's successful listing and first-day surge was a much-needed victory for its owners SoftBank and Sun Zhengyi. After the IPO, SoftBank still holds about 90% of Arm's shares. The sharp rise on Thursday increased the value of Arm shares held by SoftBank by about 12 billion US dollars. Some analysts believe that on the one hand, Arm listing can provide SoftBank with more capital, and this money may be used to invest on a larger scale in the AI field; on the other hand, it will also help Sun Zhengyi recover his face recently lost due to investment failure.

Arm's listing is a major event for the chip industry and even the “dead end” IPO market this year. Arm is the world's largest IPO this year. ARM is also the largest IPO in the US market since Rivian Auto's IPO in October 2021. Arm's IPO is also one of the top few biggest IPOs in the entire tech industry.

Arm's performance on the first day of its IPO is expected to inspire the IPOs of dozens of tech startups and other companies. The plans for these companies to go public in the US were previously in trouble due to sluggish market sentiment. For IPOs, it was the coldest period since 2009.

Arm was acquired and privatized by SoftBank for approximately $31 billion in September 2016. SoftBank agreed to sell to Nvidia for $40 billion. This deal failed last year due to antitrust regulations, which led to Arm's current IPO.

As a mountain that cannot be circumvented by the chip industry, Arm allows 99% of the world's smartphones to use the chip architecture of its own design, but this also means that there is quite limited room for growth in this field. Especially considering that during the global economic slowdown, people's demand for mobile phones was weak. This has already been reflected in Arm's revenue, showing stagnation. From FY2021 to FY2023, Arm's annual revenue was US$2,027 million, US$2.703 billion, and US$2,679 million, respectively; net profit was US$388 million, US$549 million, and US$524 million, respectively.

Faced with questions about performance growth, Arm recently gave highlights of its future growth:

It has only 10% of the cloud computing market, so there is still more room for expansion. It is expected that by 2025, benefiting from artificial intelligence, it will grow at a rate of 17% per year.
It accounts for 41% of the automotive market and is expected to grow 16%.
Royalties, which account for the vast majority of Arm's revenue, have been rising since collection began in the early 1990s. Royalties revenue for the latest fiscal year was $1.68 billion, up from $1.56 billion the previous year.