Arm Holdings stock dropped again Tuesday, falling below its opening price at last week’s initial public offering. While investors cooled toward the chip-design firm, majority owner SoftBank Group was counting its gains.
Early judgments from analysts have taken a skeptical tone toward Arm’s valuation. The brokerage Redburn Atlantic initiated coverage on the stock with a Neutral rating and a price target of $50.
“To recommend Arm at current valuations, we need higher conviction in
a multi-year earnings acceleration from a weak FY23 [fiscal 2023] base,” Redburn’s Timm Schulze-Melander wrote.
That’s not much of a worry for SoftBank (9984.Japan), which said Tuesday that it would receive $5.12 billion in proceeds from the 10% stake it sold in Arm as part of the offer. Arm’s stock price is still ahead of its initial pricing of $51 a share, and SoftBank has said it intends to remain the long-term owner of the company.
The offer proceeds will be a boost to SoftBank’s coffers for further investment, while the successful IPO of Arm is likely to improve sentiment around the possibility of further listings. SoftBank has recorded a series of hefty losses on its Vision Funds business, which holds the world’s largest venture-capital portfolio.
SoftBank doesn’t look to be wasting any time in making a new series of investments focusing on artificial-intelligence technology. The Japanese company is leading a $280 million funding round in U.S. location-mapping company Mapbox at a valuation of around $1.3 billion, the Financial Times reported Monday, citing people close to SoftBank.
Write to Adam Clark at [email protected]
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