British chip designer Arm set the price for its initial public offering in New York at US$51 per share, at the high end of its proposed range. That values the entire company at US$54.5 billion. The company’s shares will begin trading on the New York Stock Exchange today.
Significance of the valuation for the company
The valuation in the initial public offering is admittedly a drop from the USD 64 billion it was valued at last month when SoftBank bought the 25 percent stake it did not own from its Vision Fund. However, it is higher than the US$40 billion it was looking to sell Arm to chipmaker Nvidia for. However, Softbank backed out of the deal last year due to objections from antitrust authorities.
SoftBank sold 95.5 million shares in the initial public offering. The sale raised USD 4.87 billion. Arm customers including Apple, Google, Nvidia, Alphabet, Advanced Micro Devices, Intel, and Samsung also bought shares in the offering.
Efforts to attract investors
Arm is trying to convince investors that it has growth ahead of it beyond the mobile phone market, which it dominates with a 99 percent share. Weak demand for mobile phones amid the global economic slowdown has caused the company’s revenue to stagnate. For the 12 months to the end of March, total revenue was $2.68 billion, up from $2.7 billion the previous year.
The company told investors last week that it has a 10 percent share of the cloud computing market, and therefore more room for expansion, as that market is set to grow at an annual rate of 17 percent through 2025, thanks in part to advances in artificial intelligence. It has a 41 percent share of the automotive market, and this market is expected to grow at 16 percent. The mobile phone market is expected to grow by just six percent.
Source Czech Press Office
