Arm climbs 25% as nails first day of trading on Nasdaq

(Alliance News) - Global sentiment got a boost on Thursday and Friday, following the successful mega-listing of Arm Holdings PLC in New York.

Investor mood on the up, following the initial public offering of UK chip designer Arm, as its shares rose almost 25% in their Nasdaq debut. It was the largest IPO in nearly two years.

Simply put, Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said Arm "nailed its first day on Nasdaq."

The shares opened at USD56.10 on the Nasdaq on Thursday, after having been priced at USD51. They closed at USD63.59, giving Arm a market value of USD68 billion, rising a further 6.9% in after-hours trade.

Ozkardeskaya said: "Arm currently estimates that '70% of the world's population uses Arm-based products', in their PCs, cars, smartphones and so. And growth is the only possible direction for the chip designer with AI's sudden arrival to our lives."

Not only was the success of the IPO good for Arm, but it also boosted sentiment on a wider basis.

"The huge enthusiasm around trading suggests there is still very much still appetite for high-growth names, and there's growing hope that the IPO market will now become more buoyant next year. IPO activity is a strong indicator of overall sentiment – people rarely come to market when things are highly uncertain," Hargreaves Lansdown's Sophie Lund-Yates explained.

Similarily, interactive investor's Richard Hunter said the IPO provides "broader hopes that the offer may be enough to kickstart what has recently been a moribund IPO market."

It is also a key moment for the Japanese technology investor SoftBank Group Corp, which acquired Arm in 2016, as well as investment banks such as Goldman Sachs that recently have taken in far less revenue from underwriting and advisory fees.

SoftBank will retain a nearly 90% stake in Arm, and its shares closed up 2.1% in late dealings in Tokyo. The wider Nikkei 225 index gained 1.1%.

SoftBank had announced a deal to sell Arm to the US chipmaker Nvidia Corp for USD40 billion in 2020, but the deal was called off last year because of regulatory obstacles.

"Nvidia has been the go-to stock for investors looking to play the artificial intelligence theme this year, and many people have made decent money owning its shares. Attention is now shifting to Arm as a way to play AI, which means its first-day pop on the stock market might just be the start of things to come," said AJ Bell's Russ Mould.

Nvidia share closed up 0.2% at USD455.81 in New York on Thursday. Over the last 12 months, the stock has surged from USD129.29.

By Sophie Rose, Alliance News reporter

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