https://tokenist.com/arms-shares-continue-to-fall-in-premarket-bernstein-sets-46-target/
Shares of semiconductor firm Arm experienced a whirlwind of market activity recently. The company made an impressive debut on September 14, with its stock surging 25%, taking its valuation to a robust $65 billion. The strong showing provided a much-needed boost to a lackluster IPO market and also encouraged delivery company Instacart to raise its own IPO target price. However, the euphoria was short-lived; Bernstein analysts set a cautionary price target of $46 per share—24% lower than its Friday closing price—prompting a 4% dip in Arm's premarket trading on Monday.
Despite Arm's appeal as a significant player in Artificial Intelligence and cloud computing, analysts are cautioning investors to temper their enthusiasm. The company's high valuation has drawn skepticism, given that it represents a significant premium on a price-to-earnings basis compared to other chipmakers. Bernstein's cautious outlook signals potential downside risks, suggesting that Arm will need to substantiate its valuation, mainly through royalty pricing increases. The mixed signals point to a potentially turbulent market journey for Arm as it grapples with sky-high expectations.
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