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TechCheck

Arm Shares Face Big Test This Week 3/12/24

TechCheck

CNBC

Management, Cnbc, Tech, Faang, Investing, Business, Disruptors, Technology

4.566 Ratings

🗓️ 12 March 2024

⏱️ 7 minutes

🧾️ Download transcript

Summary

Shares of Arm are just fractionally higher today as its lockup period expires. That’s the 6-month period after an IPO during which insiders like early investors and employees are restricted from selling shares to prevent volatility. Will they look to sell and lock in gains? Softbank and its CEO Masayoshi Son own a 90% stake and has often drawn down on winners, including by using ownership in Alibaba to pay off debt and repurchase shares.

Transcript

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0:00.0

We're watching shares of arm today as its post IPO lockup expires.

0:04.0

Deirdrebosa taking a closer look at Softbank's stake in the company for today's

0:07.8

Tech check. This stock has just rocketed higher since its IPOD.

0:11.8

It absolutely hasn't, so it's arguably P-O-D. It absolutely hasn't.

0:13.0

So it's arguably facing now its biggest test as a public company.

0:17.0

The float, it was small to begin with when it listed on the NASDAQ last September,

0:21.0

meaning that there has been a relatively small percentage of the company's

0:24.2

total shares available for trading.

0:27.0

Now that insiders, that's early investors and employees, now that they can sell, we could see

0:31.2

more volatility.

0:32.4

And this is a stock that as Courtney alluded to has more than doubled since

0:36.8

its IPO making it tempting for some to lock in gains and sell now it's

0:41.6

down 15% in the month leading up to this expreary in and as we've seen in the past, Masa Sun likes to do bold things, often drawing on his winners.

0:55.5

Take Alibaba, arguably his most famous investment.

0:58.4

Masa has nearly completely drawn down that huge stake over the years to pay off debt, repurchase shares of

1:04.6

Soft Bank, and beef up at Second Vision Fund. Now that Arm is the new

1:08.8

Golden Goose to the Crown Jewel, will he do the same thing? Now, Exex, they were asked directly during the earnings call in February.

1:15.5

They were Lusab saying that they could utilize the assets in different ways, including

1:19.4

as collateral for a margin loan.

1:21.9

Now for other investors, though, there is this question of rotation.

1:25.0

Do you lock in arms outsized gains and put them into other semis?

1:29.0

There's certainly a case to be made that arm is punching way above its weight.

...

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