As
often
happens
when
shares
“pop”
on
the
first
day,
the
hangover
often
follows
pretty
quickly
after
the
party.
Arm
shares
surged
nearly
25%
last
Thursday,
but
this
week
they’ve
traded
below
their
IPO
price
of
$51.
Last
night’s
close
saw
the
shares
at
$52.16,
making
the
company
worth
$53.53
billion
(£43
billion).
As
my
back
story
shows,
SoftBank
bought
Arm
for
$32
billion,
or
£24
billion
at
2016
exchange
rates.
As
my
colleague
Jocelyn
Jovene
pointed
out
last
week,
the
stock
trades
on
an
earnings
per
share
multiple
of
86
times
earnings
for
fiscal
2023
and
66
times
for
2024
– making
it
one
of
the
most
expensive
stocks
in
the
semiconductor
industry.
Ahead
of
the
float
on
September
14,
Morningstar
analyst
Javier
Correonero
said
that
“from
a
valuation
point
of
view,”
says,
an
equity
analyst
at
Morningstar,
the
stock
looks
“very,
very
expensive.”
That
was
based
on
a
valuation
of
$50
billion,
and
at
one
point
last
week
that
surged
to
$60
billion.
Still,
it’s
very
early
days
and
we
await
Morningstar
coverage
on
the
stock.
The
track
record
for
highly
priced
IPOs
is
mixed
at
best.
Uber
is
still
trailing
its
2019
float
price,
but
Facebook,
now
Meta
has
increased
in
value
almost
700%
since
it
made
itde
debut
in
2012.
Hype
is
generally
bad
for
new
investors
in
the
short
term,
but
it’s
hard
to
predict
whether
a
company
has
the
staying
power.
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