Chip design firm Arm priced its initial public offering (IPO) at $51 per share, which is at the top of the expected range, valuing the company at roughly $54 billion.
The company supplies core technology to top firms such as Apple and Nvidia. Arm also said in a press release that it would start trading on Thursday under the symbol "ARM."
Arm's IPO Prices Shares at $51
Based in the United Kingdom, the company is listing at least 95.5 million American depository shares on the Nasdaq, and Softbank, the firm's current owner, will control roughly 90% of the company's outstanding shares.
In its prospectus, Arm said that its revenue in its fiscal year that ended in March slipped less than 1% from the prior year down to $2.68 billion. Additionally, the company said that net income in fiscal 2023 dropped 22% to $524 million.
The firm is currently riding the wave of excitement around artificial intelligence as it seeks to crack open the tech IPO market after a nearly two-year pause. It is expected to be the biggest technology offering for 2023, as per CNBC.
Arm's valuation, for a chip company, is seen as exceedingly rich compared to others in the market, such as Nvidia. The $54 billion tag would have the company carry a price-to-earnings multiple of roughly 104, based on profit in the latest fiscal year.
Nvidia is known to be valued at 108 times earnings, but that comes after forecasting revenue growth of 170% for the current quarter, which is driven by AI chips. Additionally, the Invesco PHLX Semiconductor ETF, designed to measure the performance of the 30 biggest chip companies in the US, has a price-to-earnings ratio of roughly 25.
Most of Arm's most important customers, such as Apple, Google, Nvidia, Samsung, AMD, Intel, and Taiwan Semiconductor Manufacturing Company, said they would buy chip design firm shares as part of the offering. Arm's technology is known to be in use in about 99% of mobile processors worldwide.
The latest IPO listing comes as SoftBank initially purchased Arm for $36 billion in 2016 in a deal to sell the company to Nvidia for $40 billion in case and stock. However, that deal collapsed in 2022 after stiff regulatory opposition, according to Barrons.
Valuation of $54 Billion
If Arm's pricing holds up when trading starts on Thursday, the deal would be considered a major win for SoftBank Group. The company has struggled recently with losses in its Vision Fund venture capital portfolio.
SoftBank has not yet commented on how it plans to spend the profits from the IPO, but the company's founder and CEO, Masayoshi Son, recently said that the firm intends to get more aggressive on investments in AI-related areas.
Arm is headquartered in Cambridge, England, and designs semiconductors and software that powers them. The company specializes in designing central processing units (CPUs), graphic processing units (GPUs), and microprocessors.
The latter ones the company designs are licensed and used in a wide variety of devices, ranging from desktop computers to smartphones and supercomputers, as well as data servers and even some vehicles, said Fox Business.
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