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Arm technology powers the chips inside almost every smartphone.
Dream time
Arm Holdings is preparing for a massive initial public offering that will test the market’s appetite for an important technology company. However, her target assessment suggests she accepts that she will not be next
Nvidia
.
British chip designer ARM has priced its initial public offering at a range that would value the company at up to $52 billion, according to a filing Tuesday.
The target is lower than the $64 billion calculation for Arm’s value after a recent stake sale involving its current owner SoftBank (ticker: 9984.Japan). SoftBank hopes to sell about 10% of the total shares outstanding in the offering, The Journal reported.
However, it still makes it the largest IPO of the year and an important milestone for it Investor interest In a major listed technology company at a time of rising interest rates. The assessment still indicates that Arm is very optimistic.
The Company will issue 95.5 million American depositary shares at a price range of $47 to $51 per share, with each common share representing one common share. With 1.03 billion common shares outstanding after the IPO, the company’s value will range between $48.23 billion and $52.33 billion.
Arm had revenue of $2.68 billion in its most recent fiscal year and net income of $524 million. This suggests it is looking for a price-to-earnings multiple of 92 to 100 times.
This is lower than the price-to-earnings ratio of 117 times that Nvidia (NVDA) trades for. However, Arm is still aiming to command a significant premium to other chipmakers that share significant exposure to the sluggish smartphone market. For example,
Qualcomm
(QCOM) is trading at a P/E ratio of 15 times.
Retrospective evaluation does not tell the whole story. Arm’s technology powers the chips inside nearly every smartphone, and it hopes many of its partners will invest in the IPO as strategic investors. nvidia,
apple
(AAPL) and Google Original
the alphabet
(GOOGL) are all among the companies that have signed up to invest. This may lead to an increase in the rating.
However, what makes sense as a strategic investment for Arm’s clients may not make sense for individual investors. Arm’s exposure to smartphones and the Chinese market has raised questions among analysts about its growth trajectory.
“Our experts are skeptical about the long-term sustainability of revenue growth and high margins for ARM. They expect annual revenue growth of 5-10% over the next five years, followed by a peak A subsequent contraction on an annual basis.”
Write to Adam Clark at [email protected]
“Infuriatingly humble alcohol fanatic. Unapologetic beer practitioner. Analyst.”