Arm Holdings rose another 6% at market open on Friday, but that gain slowed somewhat in the second day of trading after its Nasdaq debut on Thursday.
The British chip designer’s shares were trading at just over $67 at market open, implying a valuation of more than $72 billion. Arm shares rose further in early premarket trading, but pared some of that gain.
This comes after Arm shares rose nearly 25% on the company’s first day of trading on Thursday. The company’s blockbuster IPO initially priced its shares at $51 per share, valuing the company at about $54.5 billion.
As the market continues to rise, Arm continues to trade at a premium to semiconductor giant Nvidia, despite facing growth headwinds. Some analysts have expressed concerns about this valuation.
“Pricing is expensive…I think a lot of investors are thinking about it on the sidelines…and those We are watching to see how it will be implemented based on these factors.”
SoftbankThe company, which acquired Arm in 2016, had about 10% of its shares float, with major Japanese companies holding 90% of the shares.
SoftBank has faced criticism over its investment strategy after the technology investment arm of its massive Vision Fund posted steep losses in the last fiscal year. This was enough to make some investors hesitant about Arm’s IPO.
William de Gale, portfolio manager at Blue Box Asset Management, said he does not invest in ARMs.
“The bottom line is that SoftBank, which controls the company with a questionable record on asset allocation, has taken corporate governance too far,” De Gare said Friday on CNBC’s “Street Signs Europe.” “I decided it was too much to worry about,” he said.
“So we wanted to take a moment to sit on the sidelines and see how the company operates as an independent business.”
Still, demand for the stock was so strong that multiple reports this week ahead of the initial public offering suggested the listing was several times oversubscribed.
Arm’s chip architecture powers 99% of the world’s smartphones and has successfully attracted strategic investors including: apple and Nvidia To purchase listed stocks.
This week, there’s been a lot of focus on some of the risks surrounding the company, including its exposure to China and increased competition from rival semiconductor architectures backed by some of Arm’s biggest customers.
As part of that, Arm CEO Rene Haas told CNBC on Thursday that the company’s China operations are “doing well” and there is great potential in data center and automotive applications.
Arm’s strength typically lies in smartphones and other consumer electronics. But the company is now turning to new areas, including artificial intelligence, to grow its business.
“We’ve diversified our business. We’ve had significant growth in cloud data centers and automotive,” Hass said.
