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But you don't buy a company for tens of billions ignoring anything that's not relevant today. You pay basing on what you predict the company will earn between t
by lrem 6y ago
But you don't buy a company for tens of billions ignoring anything that's not relevant today. You pay basing on what you predict the company will earn between today and liquidation. When Softbank originally bought ARM, no competition was on the radar. Now there is some. Hence, valuation drops.
- janoc 6y agoSoftbank bought ARM for $32 billion, sold for $40 billion, plus they were collecting profits during all that time. Not quite sure how that meshes with "valuation drops" ... RISC-V in high performance computing is years out even if big players like Samsung or Qualcomm decided to switch today. New silicon takes time to develop. And Nvidia really couldn't care less about the $1-$10 RISC-V microcontrollers that companies like SiPeed or Gigadevice are churning out today (and even there ARM micros are outselling these by several orders of magnitude).
- lrem 6y agoLet me just quote what I originally responded to: > A 25% gain over a horizon of four years is not bad for your average investment -- but this isn't an average investment. > First, compared to the SP500, this underperforms over the same horizon (even compared to end of 2019 rather than the inflated prices right now). > Second, ARM's sector (semiconductors) has performed far, far better in that time. The PHOX (Philadelphia Semiconductor Index) doubled in the same time period. > And looking at AMD and NVIDIA, it feels as if ARM would have been in a position to benefit from the surrounding euphoria. That's the "valuation drops" - relatively to the market, ARM has significantly underperformed, despite the business being actually healthy and on the rise.