Wall Street is preparing for its largest initial public offering in nearly two years

By Nicole Goodkind, CNN

New York (CNN) – The biggest IPO since 2021 is here.

After a nearly two-year drought in the IPO market, UK-based chip designer Arm will begin trading for the first time in New York on Thursday with 95.5 million shares under the symbol “ARM” (ARM) on the Nasdaq Stock Exchange.

With an initial price of $51 per share, that puts the company’s potential market value at more than $54 billion, making this the largest IPO this year and the largest since electric truck maker Rivian in 2021.

SoftBank, which acquired Arm for $32 billion in 2016, will retain about 90% of the company’s shares.

While many Americans have likely never heard of Arm, most use the UK-based company’s products daily. Apple (AAPL), Samsung, Nvidia (NVDA), and Google use Arm’s designs and instructions to create their chips. The company is essential in the production of smartphones, laptops, video games, televisions and GPS units.

Companies including Apple, Google, Nvidia, AMD, Samsung and TSMC have expressed interest in serving as cornerstone investors in the offering, according to a filing last week.

Open the pipeline

Deal making has fallen to its lowest levels in more than a decade, as fears of a recession and rising interest rates dampen valuations. Wall Street views Arm’s listing as a weather balloon for a number of technology companies waiting to go public.

Goldman Sachs (GS) reported this summer that its investment banking revenue fell 20% in the second quarter of 2023. Overall, profits this quarter fell 58% from a year ago, to $1.2 billion.

“Activity levels in many areas of investment banking are hovering near decade-lows, and clients have largely maintained a ‘risk off’ stance on… The course of this quarter. This means that customers are concerned about betting in an uncertain economic environment.

But experts say there are plenty of healthy companies waiting to make their public debut, but they don’t want to be the first to exit.

Arm’s successful debut could be the big IPO that sets the stage for the rest.

“This is a big deal,” said Dave Sekera, chief U.S. market strategist at Morningstar Research Services. “The big idea here for investors, even in the public markets, is that if this IPO is successful, it opens the door to a wave of new IPOs. This would provide positive market sentiment for the stock market overall.”

Goldman Sachs is the lead underwriter on the IPO. The bank’s shares rose about 1% on Thursday morning.

This story is evolving and will be updated.

CNN Wire
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