Arm Whipsaws in Second Day of Trading After 25% Jump in Debut

Arm Holdings Plc’s second day of trading is proving to be a volatile one.

(Bloomberg) — Arm Holdings Plc’s second day of trading is proving to be a volatile one. 

The chip designer’s shares are swinging between gains and losses, falling as much as 2.5% after an 8.5% jump at Friday’s open, just one day after its buoyant market debut. The stock had notched a 25% rally on Thursday after raising $4.87 billion.

Needham & Co. became one of the first brokers to initiate coverage of Arm, giving the stock a hold rating.

The valuation “looks full,” analyst Charles Shi wrote in a note on Thursday. “Arm can grow by capturing greater value from smartphones, but not enough to support upside from the stock’s IPO valuation.”

Thursday’s rally was in part attributed to retail investors rushing in to snap up the shares.

Arm, whose chips are found in most of the world’s smartphones, garnered the most buy orders on Fidelity’s trading platform Thursday — easily outpacing demand for retail favorites Tesla Inc. and Nvidia Corp.

Owner SoftBank Group Corp. sold only 10% of Arm’s stock in the IPO, which according to Saxo Bank’s Peter Garnry led to low levels of participation by smaller investors. “This likely generated a lot of demand” from that part of the market, said Garnry, the bank’s head of equity strategy.

The surge in retail demand underscores how small traders are clamoring to get a piece of potential winners amid the frenzy around artificial intelligence, with Arm standing to benefit from the stampede toward AI chips. 

Investors are watching Arm’s IPO to gauge the appetite for online grocery-delivery firm Instacart and marketing and data automation provider Klaviyo Inc., which are set to price their listings next week.

Read more: Instacart Seeks to Raise $660 Million With Boosted IPO Range

(Updates stock move throughout, a previous version corrected the company name in first paragraph.)

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