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Arm's shares surge as Wall Street eyes IPO lock-up expiry

A smartphone with a displayed Arm logo is placed on a computer motherboard in this picture made March 6, 2023. REUTERS/Dado Ruvic/Illustration/File Photo Purchase Licensing Rights

NEW YORK, March 12 (mod1s) - Shares of Arm Holdings , the British chip manufacturer funded by Softbank Group (9984.T), opens new tab, rose 2.1% to $129.50 on Tuesday as markets prepared for more trading activity after the expiry of the lockup period attached to its blockbuster initial public offering (IPO). 

Most market debuts involve a lockup period of up to six months in which business insiders and pre-IPO investors are restricted from selling their shares. This often restricts the quantity of shares accessible for public trading.

With just 9.5% of Arm's outstanding shares accessible for trade since its September IPO, the expiry on Tuesday of its lockup period is likely to enable additional investors to dump a part of their holdings. Softbank holds a 90% ownership or around 930 million shares in Arm, according to LSEG statistics. 

The volume of Arm's shares traded on Tuesday was roughly 18.1 million shares, compared with the stock's 25-day moving average volume of about 28.5 million shares, according to LSEG data. Such a tiny float of shares available for trading might lead them to significant swings.

Arm's shares have climbed by 68% after it published quarterly results in February that surpassed analyst estimates, spurred by rising demand for chip designs specialized for artificial intelligence computing. 

"The lockup seems to have weighed on shares in the run-up to its expiration, but not enough to take shares below their February run-up," said Michael Ashley Schulman, chief investment officer at Running Point Capital in an emailed comment to Reuters.

"The big unknown factor pertains to Softbank's intentions regarding the 90% of the chip company that it still owns," he continued. 

Several Arm key clients, including Nvidia (NVDA.O), opens new tab, Alphabet's Google (GOOGL.O), opens new tab and Intel (INTC.O), opens new tab, also own tiny holdings in the chip creator. Taiwan Semiconductor Manufacturing Co (TSMC) (2330.TW), opens new tab reported a sale of 850,000 shares in Arm in February.


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