ARM Holdings, the semiconductor chip design firm backed by SoftBank, has priced its initial public offering at $52 per share, according to reports.
That’s higher than the expected price range of $47 to $51 and values the UK-based company at a fully diluted market cap of $55.5 billion. However, the valuation is a step down from the $64 billion at which owner SoftBank acquired a 25% stake from its Vision Fund last month.
Arm plans to list at least 95.5 million shares on the Nasdaq, of which SoftBank will own roughly 90%. The company will begin trading on Thursday under the ticker ARM.
Arm, which supplies ships designs to companies to major clients, has an impressive list of cornerstone investors, with Apple Inc (NASDAQ:AAPL), NVIDIA Corporation (NASDAQ:NVDA), Alphabet Inc (NASDAQ:GOOG), Advanced Micro Devices, Inc. (NASDAQ:AMD), Intel Corporation (NASDAQ:INTC) and Samsung Electronics (KRX:005930) already committed.
Arm’s designs are used in almost every smartphone chip, including Apple’s A-series for iPhones. The company’s instructions detail how a central processor accomplishes tasks such as calculating arithmetic or accessing computer memory, and switching between different instruction sets is expensive and time-consuming.
In its prospectus, Arm said its revenue for the fiscal year ended in March was $2.68 billion, down less than 1% year over year. Net income in fiscal 2023 dropped 22% to $524 million.
Remarkably, Arm’s $55.5 billion valuation would mean a price-to-earnings multiple of more than 106. That’s comparable to Nvidia at 108, but that takes into account expected revenue growth of 170% in the current quarter driven by surging demand for AI chips.
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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