Arm's IPO Sees Early Closure Amidst High Demand

Arm Holdings, the UK-based chip designer, is experiencing unprecedented demand for its initial public offering (IPO), prompting underwriting banks to close the order books a day earlier than initially planned. The IPO, valued at a staggering $50 billion, has garnered more than five times the subscription it sought. The closure of orders for Arm's shares is now set for Tuesday, with pricing expected to follow on Wednesday. This surge in demand could potentially push the share price towards the upper end of the $47-$51 range, or even higher, according to insiders.

At the upper limit of the price range, Arm's IPO would generate approximately $4.9 billion for its parent company, SoftBank, and value the chip designer at $54.5 billion on a fully diluted basis. However, it's crucial to note that the final price is yet to be determined. This development is seen as a significant boost for IPOs in the US market, which has seen limited activity this year. Encouraged by Arm's success, other companies, such as Instacart and Klaviyo, have also announced their IPO plans, indicating renewed investor confidence in the public offering landscape.

Despite concerns about Arm's recent flat sales and exposure to risks in China, the demand for its shares remains robust. Arm anticipates accelerated revenue growth driven by the artificial intelligence boom, despite stagnation in its core market of smartphone chips. The company sees opportunities for growth in the AI and data center sectors, reinforcing its position as a key player in the AI ecosystem. As Arm's IPO proceeds, it reflects a broader resurgence in the market, setting the stage for future tech offerings and investments.

Written by Ricky Bhargava