Shares of SoftBank's Arm Holdings opened 10 percent above their offer price in their Nasdaq debut on Thursday, giving the chip designer a valuation of nearly US$60 billion in its return to the public markets after seven years.
Its stock opened at US$56.1 per American Depositary Share compared with the initial public offering (IPO) price of US$51 and steadily extended gains to US$60, in a sign of confidence for other companies planning to list.
"This pop can get people more excited about the IPO market for the rest of this year and going into 2024," said Owen Lau, senior analyst at Oppenheimer & Co.
Arm's listing is being closely watched for signs of a revival in the IPO market that also awaits the high-profile listings of marquee startups including grocery delivery firm Instacart and marketing firm Klaviyo.
"The Arm IPO is the most hyped listing we've had in the markets for a while," said Kyle Rodda, senior market analyst at brokerage firm Capital.com. "It will also be a major test of risk appetite and whether these high-growth, speculative companies still attract interest in a new world of higher interest rates."
Arm had secured a valuation of US$54.5 billion on Wednesday after pricing its IPO at the top end of the marketed range. It fetched US$4.87 billion for SoftBank, which still holds a 90.6 percent stake.
The company was taken private in 2016 for $32 billion by SoftBank, which has been looking to cash out some of its stake since at least 2020, when it signed a US$40 billion deal with chipmaker Nvidia for Arm.
That plan, however, was abandoned by the Japanese investment giant less than two years later due to regulatory roadblocks.
Since then it has pivoted towards an IPO, though that also came with its own hurdles, including run-ins with the British government that was campaigning for a London listing for the chip designer.
Arm's return as a public company represents a climb-down from the US$64 billion it was valued at last month when SoftBank bought the 25 percent stake it did not directly own from its Vision Fund unit. (Reuters)