Can I buy ARM shares as one of the biggest IPOs ever launches today?

Jon Smith previews the IPO of ARM shares and explains why it’s best to be careful about buying within the volatile period after listing.

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Today (14 September) is a big day in the stock market, with a highly anticipated initial public offering (IPO) going live. I’m referring to ARM, which is set to trade on the Nasdaq, unsurprisingly, under the ticker ARM.

It’s exciting partly because we’ve had very few major IPOs since the pandemic. So as a UK investor, here’s everything I need to know.

The IPO details

The opening price is set at $51, which would put ARM’s value at a chunky $54.5bn. It’ll be the biggest US IPO so far this year, and one of the largest ever. The business is currently owned by SoftBank, which is the only major seller in this share offering. It expects to raise around $5bn from the share sales.

Despite having the headquarters here in the UK, ARM won’t be listing on the London Stock Exchange. It’ll launch and trade on the Nasdaq, which does make sense as this is where the major tech companies trade. The index is already home to the likes of Apple and Microsoft.

What the company does

ARM is a semiconductor and software design company. The main focus of the firm is designing central processing units (CPUs). These have a huge commercial use, given that the CPU is the brain of any software device, such as a computers and mobile phones.

Given the way the world is, there’s a huge demand for the design works of ARM. Yet I believe this is only going to increase from a couple of key areas.

At the moment, ARM only has a 10% market share in the cloud computing space. Given how this area is growing, I think this is going to be a large part of future profits for the company.

This ties in with the spike in demand for artificial intelligence (AI). ARM has a key role to play here in research and development. It’ll be interesting to see how it adapts to client requirements.

Whether to get involved now

Even as a UK investor, I can go and buy the shares today when the market opens. Depending on my investment provider, it should be eligible to hold in an ISA, just like other US stocks.

As with any IPO, there’s usually high volatility in the first few trading days. This is because you have a surge in interest from people wanting to buy at the first opportunity. Yet at the same time you have investors that held stock when the company was private that are looking to offload and sell their stake.

As a result, I tend to avoid buying right away as it can cause some unnecessary stress. Once things have settled down in a couple of weeks, I’ll feel more comfortable in buying.

Let’s be clear here, I do feel that this could be a great purchase to hold for the long term. Given the reputation it has and the future prospects with AI and cloud computing, I feel it could offer me good returns.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Jon Smith has no position in any of the shares mentioned. The Motley Fool UK has recommended Apple and Microsoft. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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