Player Incoming – Arm’s IPO Announcement
The US IPO market is slowly recovering after seeing a major pullback since 2022 as recent economic conditions have made it unfavorable for companies to enter the public market. According to Dealogic, US IPOs raised a whopping $155.8 billion in 2021, but rising interest rates and inflation placed a major dent in that number. Currently, in the first half of 2023, IPOs have raised a meager $10.1 billion, lacking those big names like Snowflake and DoorDash, although that number has increased by 115 percent from last year.
However, a big name just recently filed for an IPO that will determine how market conditions are at the moment. Arm, the chip company owned by SoftBank, an investment group, announced on Monday that they are planning to enter the public market via an IPO. Arm is one of the most important tech businesses in the entire world because their chip designs are used in almost every single smartphone processor, whether it’s Apple or Android, along with many other pieces of technology. Arm creates the designs and code for the chips, which manufacturers use to produce the semiconductors that are in use in our everyday lives. Back in 2016, SoftBank purchased Arm for $32 billion, and it’s fair to assume that the company is valued much higher now as the business is continuing to expand.
Not only will this allow us to gauge if the IPO market is finally back to normal, but the performance of Arm’s IPO is vital for SoftBank moving forward. SoftBank has been struggling recently due to the slump in the tech sector, with its investments in companies like WeWork going sour. Recently, they have tried to pivot their focus to artificial intelligence, and Arm fits into that fold due to their involvement and current shift towards the AI business in the past few months. If Arm ends up successful, it will instill confidence in SoftBank heading into a technologically changing world, which is key for their business moving forward.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.