Arm Holdings, the British chip designer backed by Softbank Group, experienced a 2.1% rise in its shares, reaching $129.50 as the market anticipated heightened trading activity following the expiration of its lockup period tied to its IPO.
Lockup periods, usually lasting up to six months, prohibit insiders and pre-IPO investors from selling shares, restricting available shares for public trading.
Prior to the lockup period’s expiration, only 9.5% of Arm’s outstanding shares were available for trading since its September IPO. With the lockup period ending, more investors are expected to sell a portion of their holdings.
Softbank, owning a 90% stake equivalent to about 930 million shares, may potentially sell off some shares, impacting market dynamics.
Trading volume for Arm’s shares on Tuesday reached 18.1 million shares, lower than the 25-day average of 28.5 million shares, indicative of limited share availability and potential for significant price swings.
Arm’s recent surge, up by 68%, followed strong quarterly results driven by increased demand for chip designs tailored for artificial intelligence computing. Analysts speculate about Softbank’s intentions regarding its majority stake, noting the uncertainty surrounding its potential impact on the market.
Michael Ashley Schulman, chief investment officer at Running Point Capital, noted that while the lockup period may have influenced share performance, it wasn’t sufficient to counteract previous gains. The market remains uncertain about Softbank’s future plans concerning its ownership stake in Arm.
Several major Arm customers, including Nvidia, Google, and Intel, hold smaller stakes in the chip design. Taiwan Semiconductor Manufacturing Co disclosed the sale of 850,000 shares in Arm in February, further impacting market dynamics.
