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Why would they go public at this time? It seems like companies do this because they need a big infusion of cash. I’m curious as to what would be going on in the
by guidoism 3y ago
Why would they go public at this time? It seems like companies do this because they need a big infusion of cash. I’m curious as to what would be going on in the company to warrant this.
- Buraksr 3y agoMy understanding is that it is ARM's parent company Softbank that stands to benefit rather than ARM looking to reinvest the money to fuel growth. ARM would benefit only slightly, as its employees have RSUs that the company said it would honor in the event that no sale of ARM occurs. Softbank on the other hand has 10's of billions of losses since 2017 from its vision fund and may be looking to rebalance its books. I can see why ARM would be a good asset to sell from Softbank's perspective. ARM is unlikely to see explosive growth in a new segment, and the market as a whole, and the tech sector in particular has fairly 'healthy' PE ratios[1]. This means that Softbank could realize more cash from a sale now than a hypothetical future time when there is more pessimism in the market. [1]P/E ratio is the ratio between the price of a stock and its earnings. Some notable outliers are Nvidia @ 232 & AMD @ 483 compared to Intel @ 15.36 or Texas Instruments @ 20.01; PE is higher for companies that are expected to grow and lower for companies that are mature or declining.