In what is almost guaranteed to end up as the year's biggest public flotation event by a long shot, Arm is all set to start trading on the Nasdaq exchange on Thursday after managing to land an IPO valuation of over $50 billion.
As per the reporting by the Wall Street Journal, Arm has priced its IPO at $51 per share, which values the chip designer at $54.5 billion. Bear in mind that SoftBank had been targeting a valuation of as much as $64 billion just a few weeks back. At its current valuation, Arm will manage to raise around $5 billion from investors.
SoftBank had purchased ARM for $32 billion back in 2016. NVIDIA was slated to acquire ARM at a $40 billion valuation but was forced to walk away from the deal after facing stringent competition-related opposition from regulators around the world.
ARM earned $2.68 billion in revenue for the year that ended on the 31st of March, 2023, corresponding to a marginal decline from the $2.70 billion that the company earned in the preceding year. For the just-concluded year, the company earned $524 million in net income from operations.
To combat this slump in revenue, Arm is reportedly increasing its royalties, with the company targeting a 20 percent revenue growth for the financial year ending in March 2025.
Arm is targeting a Total Addressable Market (TAM) of $202.5 billion. As a refresher, SoftBank-owned, UK-based Arm Holdings designs silicon chips and licenses instruction sets that govern how chips communicate. The company’s intellectual property – including its Reduced Instruction Set Computing (RISC) Instruction Set Architecture (ISA) – is utilized by the likes of Apple, Qualcomm, Samsung, and Huawei for their smartphone chips, ensuring market coverage of around 90 percent.
The chip designer is increasingly pivoting toward AI as its next growth driver. NVIDIA’s CEO, Jensen Huang, recently stated that the all-new Grace Hopper AI chip would not have been possible without Arm’s architecture.
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