Guns shares rise 24% from IPO price after Nasdaq debut

By | September 15, 2023

British chipmaker Arm (ARM) made its public markets debut on Thursday, opening at $56.10 on the Nasdaq in afternoon trading.

Arm’s shares jumped 10% right at the start of trading and rose more than 20% to above $61 in the first 30 minutes of trading. The stock closed up nearly 25%. At the time of the IPO, shares were priced at $51 each.

The company opened trading at a valuation of $54.5 billion, but its market capitalization has already risen to more than $60 billion.

“This is a great first step in reopening what has been something of an IPO drought in the U.S. tech market for 18 months,” Blueshirt Group CEO Mark Roberts told Yahoo Finance Live on Thursday.

The chipmaker’s listing is the highest-profile IPO the Nasdaq has seen since the IPO boom of 2021, which failed in 2022.

Since then, the IPO market has been relatively quiet, slowly picking up with the IPOs of beauty company Oddity (ODD) and Mediterranean restaurant chain Cava (CAVA) over the summer. That trickle has turned into, at the very least, a flood of IPOs, with the opening of Arm and the recent filings of Instacart (CART) and Klaviyo.

“This could be a lot more important than people think,” Matt Maley, a strategist at Miller Tabak, told Yahoo Finance Live ahead of the IPO on Thursday. “Self [Arm] that’s fine, this will definitely help open things up for a market that has been dormant for over a year now. It will also tell us something about the whole artificial intelligence thing. There’s still a lot of hype around it, but not the big euphoria.”

ARM Holdings CEO Rene Haas, center, rings the Nasdaq opening bell at the Nasdaq MarketSite during his company's IPO in Times Square in New York, Thursday, Sept. 14, 2023. (AP Photo/Richard Drew)

Arm Holdings CEO Rene Haas, center, rings the Nasdaq opening bell at the Nasdaq MarketSite during his company’s IPO, in Times Square in New York, Thursday, Sept. 14, 2023. (Richard Drew/AP Photo)

However, just because these IPOs are on the move doesn’t mean their valuations aren’t a sticking point. In Arm’s case, the company reportedly sought a valuation of between $60 billion and $70 billion.

Similarly, Instacart – valued at $39 billion at the close of its 2021 funding round – is now reportedly seeking a valuation of $9.3 billion.

Arm’s public debut “is a significant indicator, but you need more than just one company to list to give a sense of change,” Gené Teare, senior data editor at Crunchbase, told Yahoo Finance.

What Arm does

Arm is a unique company, especially among technology companies. As a chip designer, Arm’s customers include some of the biggest names in technology, including Apple (AAPL).

“It’s a unique company,” Rainmaker Securities CEO Greg Martin told Yahoo Finance Live. However, he added, “we have to be very careful. It’s obviously a chip design that’s ubiquitous in 99% of our smartphones. It didn’t grow last year, but it has huge growth potential … in artificial intelligence.”

The company has gone through a number of transitions in recent years. In 2016, SoftBank acquired Arm, taking it private for around $30 billion. In 2021, Nvidia (NVDA) attempted to acquire Arm in a failed deal after a regulatory conflict that lasted nearly a year and a half.

Recently, Arm has attempted to change its revenue model, changing pricing and implementing a modified licensing strategy for customers.

“They’re shifting their focus a little bit away from the smartphone area and towards artificial intelligence,” Maley said. “Even though it’s a little bumpy, I think it’s a smart way to go about it.”

In short, Arm’s return to public markets on Thursday was a high-stakes moment.

“If this type of IPO fails a little bit, that could present some problems for the tech sector in general,” Maley said. “On the other hand, if it does very, very well, perhaps that could help the tech sector which has been trading in a sideways range for a couple of months now.”

Allie Garfinkle is a Senior Tech Reporter at Yahoo Finance. Follow her on Twitter at @agarfinks and so on LinkedIn.

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