News update: September, 2023
Following a successful market debut, Arm shares are now trading on Wall Street under the ticker code ARM.
The British chipmaker, Arm Holdings, listed shares on the Nasdaq exchange as an ADS. An ADS - or American Depository Share - is the name given to non-US companies that list on a US stock exchange.
This means you can now buy Arm shares directly through an online trading platform that has access to US stocks.
You can buy Arm shares by following a few simple steps:
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On Thursday 14 September, British chip designer Arm Holding listed on the Nasdaq with a price of $56.10. On its first day of trading, Arm jumped 25% to a close of $63.59, resulting in a valuation of US$65 billion.
It's likely to be the biggest IPO of 2023.
After months of speculation, Arm, whose parent company is SoftBank, filed to go public in August 2023.
The news landed during a significant moment for chipmakers like NVIDIA, whose valuations are getting bolstered by the hype around artificial intelligence (AI). GPU chips are required in AI training, including by applications like ChatGPT.
While no target share price was included in the initial filing, SoftBank initially sought a valuation of between $60 billion and $70 billion.
That valuation was later reduced to US$54.5 billion and $51 per share for pre-listed IPO stock.
Ahead of its listing on September 13, Arm shares were reportedly oversubscribed.
Arm is a major semiconductor company headquartered in the UK and owned by Japanese company SoftBank Group.
The firm primarily designs CPUs although it also designs other chips like GPUs and chip-related infrastructure and software. Its major competitors include AMD, NVIDIA, IBM and Intel.
Arm had previously listed on the London Stock Exchange (LSE) although it delisted in 2016 after it was acquired by SoftBank.
In 2022, a takeover deal by Nvidia collapsed and SoftBank subsequently announced plans to re-list on the NASDAQ.
Arm has already listed on the stock exchange, so it's too late to buy IPO stock, however you can buy ordinary shares via a share trading platform.
Before stocks list on an exchange, some investors will get the opportunity to buy pre-IPO stock. But in most cases this is only available to institutional or high net-worth investors.
That being said, it's worth checking with your broker or trading platform whether they're offering pre-listed stock to retail investors. In some rare instances, brokers do offer pre-IPO stock to clients, particularly if they have a partnership with the underwriters.
The lead underwriters in the Arm IPO are Barclays, Goldman Sachs, JPMorgan Chase, and Mizuho Financial Group.
Buying shares in any company comes with risks but there are particular considerations that should be made when buying IPO stock.
Big name IPOs like Arm are typically surrounded by a lot of hype. This may be spurred on by the media, commentators or marketing efforts from the company itself. The idea is to get as much good press happening in the lead up to the listing.
But all this noise can result in higher than normal volatility once the stock starts trading. It's not unusual to see a stock price jump on the first day of trading, only to nose dive in the days following.
It's worth remembering that some active traders see IPOs as an opportunity to make a quick profit by driving up prices, only to make a sudden exit at the peak. With the market's fixation on AI, it's certain Arm will garner plenty of interest and speculation.
For this reason, investing in newly listed IPO stock can be riskier than buying regular stock. Do your homework and only invest what you can afford to lose.
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