tastylive logo
ARM Holdings
Image Courtesy of Shutterstock

Sep 21, 2023

ARM Stock Outlook Strained as Prices Fall Below IPO Debut

By:Thomas Westwater

ARM Stock Slips Under IPO Price: Time to Buy?

  • ARM Holdings is under pressure.
  • The broader market is weighing ARM's down price after FOMC meeting.
  • The fundamentals hardly support a bullish outlook.

ARM Holdings plc (ARM) hasn’t had the best first week of trading. Since its initial public offering (IPO) last Thursday, the stock is down nearly 10% to trade around $50.50 per share, which is below its IPO price of $51 per share.

While the stock enjoyed a strong first two days of trading, the enthusiasm quickly faded. Instacart (CART) is also having a rough go at it during its first week of trading. These selloffs have sapped enthusiasm created around these IPOs, which signaled a healthy capital-raising environment.

The consequences, assuming these losses are maintained, could dissuade more IPOs until market optimism recovers. That wouldn’t necessarily bode well for market confidence, which is already waning.

The Federal Reserve rains on the parade

While investors had their individual hesitations regarding ARM (what stock doesn’t?), we can confidently point our fingers at Jerome Powell and his central bank for ruining the good times. The broader market is down nearly 2%—gauged by e-mini S&P 500 futures, /ESZ3—since Wednesday’s announcement from the Federal Open Market Committee (FOMC).

It's likely that the higher-for-longer narrative dominating sentiment won’t bode well for stocks in the months ahead, especially for budding startups and companies like ARM that are looking to aggressively expand. However, the market has shown resiliency in the face of future rate hikes earlier this year—and that optimism may return.

ARM stock outlook

The outlook among analysts who give a rating on the stock isn’t looking the greatest. According to Bloomberg, one analyst has a buy rating on the stock, two have a hold rating, and one has a sell rating.

Unfortunately for ARM, its revenue from the smartphone market will be hard to grow, mostly from it already dominating the market. Inflation may make things worse as consumers opt to hold their current phones for longer instead of upgrading.

When comparing ARM to a basket of comparable stocks (using data from Bloomberg), ARM trades at a 164% premium against the average of those peers on a blended forward price-to-earnings basis (54.4x versus mean of peers: 20.6x).


That said, if you like the stock, it might be better to wait until the price drops a bit more before taking a directional position. The implied volatility, looking at the November 3 expiration (IVx), is 52.9%, indicating the market is pricing a move of 6.26 in either direction by that time. So, if you want to trade volatility in ARM, you can probably find it.


Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater

For live daily programming, market news and commentary, visit tastylive or the YouTube channels tastylive (for options traders), and tastyliveTrending for stocks, futures, forex & macro.

Trade with a better broker, open a tastytrade account today. tastylive, Inc. and tastytrade, Inc. are separate but affiliated companies.

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

Related Posts

tastylive content is created, produced, and provided solely by tastylive, Inc. (“tastylive”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, digital asset, other product, transaction, or investment strategy is suitable for any person. Trading securities, futures products, and digital assets involve risk and may result in a loss greater than the original amount invested. tastylive, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastylive is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparisons, statistics, or other technical data, if applicable, will be supplied upon request. tastylive is not a licensed financial adviser, registered investment adviser, or a registered broker-dealer.  Options, futures, and futures options are not suitable for all investors.  Prior to trading securities, options, futures, or futures options, please read the applicable risk disclosures, including, but not limited to, the Characteristics and Risks of Standardized Options Disclosure and the Futures and Exchange-Traded Options Risk Disclosure found on tastytrade.com/disclosures.

tastytrade, Inc. ("tastytrade”) is a registered broker-dealer and member of FINRA, NFA, and SIPC. tastytrade was previously known as tastyworks, Inc. (“tastyworks”). tastytrade offers self-directed brokerage accounts to its customers. tastytrade does not give financial or trading advice, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastytrade’s systems, services or products. tastytrade is a wholly-owned subsidiary of tastylive, Inc.

tastytrade has entered into a Marketing Agreement with tastylive (“Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’s brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade. tastytrade and Marketing Agent are separate entities with their own products and services. tastylive is the parent company of tastytrade.

tastycrypto is provided solely by tasty Software Solutions, LLC. tasty Software Solutions, LLC is a separate but affiliate company of tastylive, Inc. Neither tastylive nor any of its affiliates are responsible for the products or services provided by tasty Software Solutions, LLC. Cryptocurrency trading is not suitable for all investors due to the number of risks involved. The value of any cryptocurrency, including digital assets pegged to fiat currency, commodities, or any other asset, may go to zero.

© copyright 2013 - 2023 tastylive, Inc. All Rights Reserved.  Applicable portions of the Terms of Use on tastylive.com apply.  Reproduction, adaptation, distribution, public display, exhibition for profit, or storage in any electronic storage media in whole or in part is prohibited under penalty of law, provided that you may download tastylive’s podcasts as necessary to view for personal use. tastylive was previously known as tastytrade, Inc. tastylive is a trademark/servicemark owned by tastylive, Inc.