Arm's New IPO Filing Targets a Potential $52 Billion Valuation

Arm announced an update to its SEC IPO filing today, proposing a share price range of $47 to $51. At the upper end, this would elevate the British chip maker's valuation to over $52 billion. The company has experienced significant growth in recent years as some of the world's largest hardware manufacturers have adopted its architecture. Notable clients include tech giants such as Apple, Google, and Samsung, along with leading component suppliers like Nvidia and AMD.

Arm is strategically positioned to capitalize on the current AI trend, with its technology integrated into almost every smartphone available today. The potential to design the architecture for the silicon that will fuel the next wave of mobile and desktop AI advancements is generating considerable excitement on Wall Street, contributing to a surge in interest surrounding chipmakers like Nvidia.

The upcoming IPO is partly motivated by the need for a capital influx. If the shares reach the top end of pricing, Arm could secure a $4.87 billion boost, which would significantly support its ongoing research and development efforts.

This IPO is led by SoftBank, which acquired Arm in 2016 for $32 billion, taking the company private after 18 years of joint listing on Nasdaq and the London Stock Exchange. Post-IPO, less than 10% of Arm's shares will be publicly traded on the NYSE, while SoftBank will retain 90.6% ownership. The company is aiming to list under the ticker symbol “ARM.”

In 2022, Arm saw a significant revenue increase of one-third year-over-year. However, growth has moderated recently, influenced by supply chain challenges and broader economic factors—often perceived as warning signs on Wall Street. The current peak valuation of $52 billion is considerably lower than earlier expectations, which reached up to $70 billion, with initial IPO filings in April estimating the valuation around $64 billion.

As reported in March, Arm's latest annual revenue was $2.68 billion, reflecting a 1% decline that has led some investors to reconsider the sustainability of these valuations. Nevertheless, the proposed pricing range of $47 to $51 would represent a robust increase from its previous $32 billion acquisition.