ARM stock jumps 25% after biggest IPO in nearly two years

New York
CNN
—

The biggest IPO since 2021 is here.

After a nearly two-year drought in the IPO market, Arm, the U.K.-based chip designer, made a successful debut on the Nasdaq on Thursday, ending the day up 25% and landing the company with a market value of about $65 billion.

The company began trading in New York Thursday afternoon with 95.5 million shares under the symbol “ARM” (arm). Trading opened at $56 per share — Already 10% higher than the initial offer price – It closed at $63.59.

The strong opening marks the largest IPO this year — and the largest since electric truck maker Rivian in 2021.

The Dow rose more than 330 points on Thursday, marking its best day since August as investors cheered the news.

SoftBank, which acquired Arm for $32 billion in 2016, He will retain approximately 90% of the company’s shares.

While many Americans have never heard of Arm, most use the company’s products daily. apple (Camel), Samsung, Nvidia (NVDA) Google uses Arm designs and instructions to create its chips. The company is essential in the production of smartphones, laptops, video games, televisions and GPS units.

Companies including Apple, Google, Nvidia, AMD, Samsung and TSMC have expressed interest in serving as cornerstone investors in the offering, according to a filing last week.

“We are very happy about this day,” Arm CEO Rene Haas told CNN Thursday afternoon. “It’s a great day for the company… Our bankers say if you can price at the high end of the range and break out of that number, that’s good. This is where we finished and we couldn’t be happier.”

Deal making has fallen to its lowest levels in more than a decade, as fears of a recession and rising interest rates dampen valuations. Wall Street views Arm’s listing as a weather balloon for a number of technology companies waiting to go public.

Goldman Sachs (A) reported this summer that its investment banking revenues fell 20% in the second quarter of 2023. Overall, profits this quarter fell 58% from a year ago, to $1.2 billion.

“Activity levels in many areas of investment banking are hovering near decade-lows, and clients have largely maintained a ‘risk off’ stance,” Goldman Sachs CEO David Solomon said on a recent earnings call. Over the course of this quarter. This means that customers are concerned about betting in an uncertain economic environment.

But experts say there are plenty of healthy companies waiting to make their public debut, but they don’t want to be the first to exit.

Arm’s successful debut could be the big IPO that sets the stage for the rest.

“This is a big deal,” said Dave Sekera, chief U.S. market strategist at Morningstar Research Services. “The big idea here for investors, even in the public markets, is that if this IPO is successful, it opens the door to a wave of new IPOs. This would provide positive market sentiment for the stock market overall.”

Goldman Sachs is the lead underwriter on the IPO. The bank’s shares closed up about 2.9% on Thursday.