SoftBank, the current majority owner of Arm, recently bought a 25% stake in Arm from its Saudi-backed Vision Fund, valuing Arm at $64 billion. This valuation is double what the Vision Fund paid for it in 2017. However, the Financial Times suggests that Arm's actual value is closer to $30 billion. The IPO could raise as much as $10 billion, making it the year's largest IPO. The success of Arm's IPO will depend on its ability to convince investors of its potential in the AI and server markets, despite the risks and challenges it faces.
Key takeaways:
- Arm, a Cambridge, England-based company that designs chips, is preparing for an IPO. The company's bull case relies on its ability to move into the AI market, but its recent corporate filing raises some concerns about significant drawbacks.
- SoftBank, the current majority owner of Arm, bought a 25 percent stake in Arm last week from its Saudi-backed Vision Fund, which valued Arm at $64 billion. However, some believe that Arm's actual value is closer to $30 billion.
- Arm's biggest customer is Arm China, an independent operation over which Arm has no control. Arm China accounts for a quarter of Arm's revenue, but it is currently late on payments and Arm has had trouble getting "timely and accurate" information from it.
- The IPO market has slowed significantly in the last year, and Arm's IPO will serve as an important bellwether for investor sentiment. If successful, Arm's IPO might clear the way for other companies to go public as well.