Arm prices IPO at $51 a share, valuing company at over $54 billion

Arm, the chip design firm that supplies core technology to corporations including Apple and Nvidia, priced its initial public offering at $51 a share.

Arm’s fully diluted market cap, which incorporates outstanding restricted stock units, is over $54 billion on the $51 offer price. The corporate said in a press release that it can start trading on Thursday under the symbol “ARM.”

The U.K.-based company is listing not less than 95.5 million American depository shares on the Nasdaq, and SoftBank, its current owner, will control about 90% of the corporate’s outstanding shares.

The offering is at the highest of Arm’s expected price range of $47 to $51.

Arm said in its prospectus that revenue in its fiscal yr that resulted in March slipped lower than 1% from the prior yr to $2.68 billion. Net income in fiscal 2023 dropped 22% to $524 million.

Arm is riding the wave of pleasure around artificial intelligence because it goals to crack open the tech IPO market after a virtually two-year pause. It’s set to be the largest technology offering of the yr.

Arm’s valuation for a chip company is exceedingly wealthy in comparison to any player available in the market apart from Nvidia. At $54 billion, Arm would carry a price-to-earnings multiple of about 104, based on profit in the most recent fiscal yr.

Nvidia is valued at 108 times earnings, but that is after forecasting revenue growth of 170% for the present quarter, driven by AI chips. The Invesco PHLX Semiconductor ETF, which is designed to measure the performance of the 30 biggest U.S. chip corporations, has a price-to-earnings ratio of about 25.

Lots of Arm’s most vital customers, including Apple, Google, Nvidia, Samsung, AMD, Intel and Taiwan Semiconductor Manufacturing Company, said they might buy shares as a part of the offering. Arm’s technology is utilized in 99% of mobile processors world wide.

Arm’s architecture outlines how a central processor works at its most elementary level, resembling tips on how to do arithmetic or tips on how to access computer memory. The corporate was originally founded in 1990 to construct chips for devices with batteries and took off when it began to be widely utilized in smartphone chips. Arm’s instruction set uses less power than the x86 architecture utilized in PC and server chips by Intel and AMD.

While a few of Arm’s customers just use the instruction set and design their very own CPUs, Arm also licenses entire designs of its own to chipmakers they’ll use as CPU cores in their very own chips. Amazon uses Arm CPU designs in a few of its server chips.

In a presentation to investors, Arm officials said the corporate has room to grow beyond just smartphones and needs to design more chips for data centers and AI applications. It said it expects the overall marketplace for chip designs to be value about $250 billion by 2025.

Correction: A previous version of this story had the inaccurate IPO price.