Friday saw Arm Holdings jump 6% in pre-market U.S. trading. The company's initial public offering on Thursday priced its shares at $51 apiece, resulting in a market capitalization of around $54.5 billion. This week has been characterized by interest in Arm's potential risks, chiefly its venture into China and the increasing competition from another chip architecture endorsed by some of Arm's most influential customers.
Arm Holdings saw its shares surge by another 6% during pre-market trading in the U.S. on Friday, building on Thursday's impressive 25% increase which followed its Nasdaq debut. At 6:10am ET, shares traded just over the $67 mark, bringing its valuation to over $72 billion. This was a slight reduction on earlier, loftier figures. Analysts have remained wary of its current valuation, however, with Ben Barringer, an equity researcher at Quilter Cheviot, telling CNBC's "Squawk Box Europe" that "the pricing is expensive" and suggesting investors may not be eager to jump on board just yet. Softbank, which bought Arm in 2016, floated 10% of the company during the offering, with it retaining a 90% controlling stake. This transaction comes amongst substantial criticism of the Japanese company's investments, with its Vision Fund arm having posted an enormous loss in its last fiscal year. Some investors may be deterred as a result.
William de Gale, the portfolio manager at BlueBox Asset Management, said that his company declined to invest in ARM because of worries about corporate governance and Softbank's past record for asset allocation. On Friday, de Gale told CNBC's "Street Signs Europe" that they wanted to see how the company would function independently before making a decision. Despite this, the interest in the stock was significantly high, and Apple and Nvidia were among the strategic investors who bought the shares. Nonetheless, the scrutiny of the company was still very high due to concerns about its involvement with China and the increasing competition from a rival semiconductor architecture, whose customers include some of Arm's top clients.
Rene Haas, the CEO of Arm, informed CNBC on Thursday that their company's China business is performing well, and that it has huge potential in data center and automotive applications. Arm has traditionally been known for smartphones and other consumer electronics, however they are now turning to sections such as artificial intelligence to expand their business. According to Haas, "We have changed up our business. We've seen significant expansion in the cloud data center and automotive sectors."
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