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Arm IPO

Everything you need to know

British semiconductor company and SoftBank subsidiary Arm Holdings will finally launch its initial public offering on Wednesday 13 September. Learn more about the company and how to get involved with its upcoming IPO.

UK flag logo
FCA regulated
FSCS logo
Segregated funds
LSE logo
FTSE-listed group

13 September 2023

Going public

$52bn

Valuation

$2.68bn

2023 revenue

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What does the company do?

Arm Holdings, which was founded in 1990 with headquarters in Cambridge, is a semiconductor and software designer. The company’s name stands for Advanced RISC Machines, which is a family of reduced instruction set computer (RISC) architectures that utilise central processing units (CPUs), system on a chip (SoC), and system on module (SoM) designs.

It has a significant market share for these processors and chips, which are used in mobile phones, tablets, smart TVs, laptops, although the company doesn’t manufacture them themselves, but rather licenses the designs to other companies. Since its inception, Arm has shipped over 200 billion chips around the world, and close to 900 chips based on its architecture are produced every second.

Some well-known products that it has helped to materialise include the Nokia 8110 and 6110, BBC microcomputer, Ford’s smart car, Amazon Kindle e-reader, Da-Jiang Innovations (DJI)’s drones, and Fitbit’s smart watches.

When is Arm’s IPO date?

The IPO is set for 13 September 2023, with trading in Arm shares on the Nasdaq exchange starting the following day. Enter your email into the sign-up box below to receive a notification when Arm stock has listed on its chosen exchange.

Where will it be listing?

Although it’s a British company, SoftBank will list on the tech-focused Nasdaq exchange), as there are concerns that the stock would be undervalued in the London market.

This has caused some outrage in the UK, similar to when Japanese tech conglomerate SoftBank took over the company in 2016. The country has faced scrutiny over recent years for its inability to retain British technology companies and the IPO market has experienced several flops (most notably Deliveroo in 2021).

What will Arm’s share price be?

Cambridge-based Arm plans to price its IPO at between $47 and $51 a share, which would raise up to $4.9bn and value the business at up to $52bn. This is a lower valuation than had previously been predicted, with some forecasts having estimated a valuation of up to $70bn.

What is Arm’s valuation?

Arm was reportedly worth over $40bn (£29.6bn) according to a proposed takeover bid by Nvidia in 2020. The company was due to be bought out by the semiconductor giant, but these plans failed to materialise and were officially cancelled in 2022, due to strong opposition from regulators and competitors across the US, UK, and Europe.

As Nvidia’s share price has soared over the past two years since the company announced its takeover, Arm could be worth up to $75bn when it actually goes public, according to The Guardian, thought the anticipated valuation is closer to $52bn. 

How to trade on the IPO

1. Open an account

Choose whether you want to spread bet or trade CFDs when the derivative is available on our platform. You can practise trading on Arm’s competitors in the meantime with virtual funds on a CMC Markets demo account.

2. Register your interest

By entering your email into the sign-up box above, we will notify you when the company has listed on its chosen exchange.

3. Pick a strategy

Choose whether you want to go long (buy) or go short (sell). Please note that some trading restrictions may apply on initial trading.

4. Manage your risk

Learn how to apply stop-loss and take-profit orders on your positions to minimise capital loss as much as possible.

What do the company’s financials look like?

Before its acquisition in 2016, the company was listed on the London Stock Exchange and part of the FTSE 100 index. Since then, Arm’s financials have shown slow but steady growth, as reported in SoftBank’s annual subsidiary reports.

Arm's revenue fell about 1% to $2.68bn for the fiscal year ended 31 March 2023, according to its filings. The company's net income, which jumped to $549m FY22 from $388m the previous year, fell to $524m in 2023.

Previous CEO Simon Segars was also replaced by Rene Haas in February 2022, helping to shake up the company.

Please note that past performance is not a reliable indicator of future results.

Why may investors be interested in the IPO?

As Arm appears to have suffered from slow revenue growth during SoftBank’s ownership, going public may help the company to get back on track, helped by high demand within the 5G and semiconductor industries. In particular, the global chip shortage started in 2020, meaning that chipmakers currently have a much higher valuation around the world.

The company has increased investment in its research and development facilities to maintain its position within the smartphone, consumer electronics, and computing spaces, as well as enter into emerging technology surrounding autonomous vehicles, the Internet of Things (IoT), and virtual reality. It also announced plans to license its technologies to original equipment manufacturers (OEMs) and cloud companies.

Is Arm facing any challenges?

In what would’ve been the largest deal ever in the semiconductor industry, it was agreed that Nvidia would purchase Arm for $40bn back in 2020, but this deal was abandoned by the end of 2021. Although this shows that the company is in demand, the company’s volatile history as SoftBank’s subsidiary may deter some investors, especially in the UK.

Arm's prospectus contains details of the company's "labyrinthine" relationship with China, its second-largest market. Sales in China contributed 24.5% of its $2.68bn revenue in FY23, report Reuters. Nearly all that revenue is from Arm China, an independent entity that has exclusive rights to distribute Arm's technology in the country. Arm China is therefore Arm's largest customer, with a history of late payments, and presents "significant risks" to Arm's business, according to its filing. US sanctions limiting sales to China, along with rising competition in the Chinese market, also cast doubt on Arm China's long-term trajectory.

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Client sentiment is provided by CMC Markets for general information only, is historical in nature and is not intended to provide any form of trading or investment advice – it must not form the basis of your trading or investment decisions.

FAQS

What are some other semiconductor stocks to watch?

Some of Arm’s competitors within the semiconductor industry include Qualcomm, IBM, Advanced Micro Devices, and Skyworks Solutions, which are all involved in the design or manufacturing of CPUs, chips, and other related components.

Is Arm a UK tech company?

Arm is a Cambridge-based designer of semiconductor chips, software, and related tools, making it a potentially exciting company to watch in the future. See more UK tech stocks to watch right now.

Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.

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