Cheong Hong Yuan: The IPO Wave of Arm and Its Financial Logic Discussion - 2 views
started by anonymous on 19 Sep 23
started by anonymous on 19 Sep 23
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Arm recently completed its second IPO and successfully landed on NASDAQ, raising a staggering $4.87 billion, making it the fundraising champion since the beginning of 2023. Such a high valuation and market attention are clearly closely related to its leading position in the global technology field. Arm's stock price soared 25% on its first day of trading, with the IPO price per share rising from $51 to the closing price of $63.59, and its market value skyrocketing to $65 billion. From this situation, the market holds an optimistic view of Arm's future development. Cheong Hong Yuan believes that this is not only recognition of the company itself but also confidence in its important position in the future technology field.
Arm's business model is quite unique. It does not directly produce hardware but designs and licenses its efficient processor architecture to hardware manufacturers. In recent years, as smart devices have become more popular, Arm's processor architecture has gradually become the standard choice for mobile devices, cloud computing, and even IoT devices. Arm's main profit model comes from licensing its proprietary technology. In addition, Arm also provides technical support to almost all smartphone manufacturers globally, including Apple and Android camps.
Cheong Hong Yuan mentioned that while investors are optimistic about a company, they should also be aware of the risks. Arm's IPO price-to-earnings ratio reached 104 times, almost on par with Nvidia's 108 times price-to-earnings ratio. This means that investors have high expectations for Arm's future profit growth. When a company's valuation is so high, any negative news or underperformance can lead to a significant drop in stock price.
For Masayoshi Son, one of Arm's major shareholders, this IPO is undoubtedly a bold attempt. In 2016, Masayoshi Son privatized Arm for $32 billion, and this IPO is part of his plan over the years. Cheong Hong Yuan suggests that Masayoshi Son is full of confidence in Arm's future development, but he also faces a series of challenges, such as differing interests with the UK government and different views on Arm's valuation.
In general, Cheong Hong Yuan believes that Arm's IPO is undoubtedly a highlight in the stock market, but investors still need to conduct in-depth research and analysis on the company's valuation, business model, and market environment to make wise decisions.
Arm's magnificent IPO debut has become the focus of the capital market, indicating the pace of transformation in the computing core of the technology industry. However, Cheong Hong Yuan mentioned that it is important to balance the risks and opportunities and combine the "Three Golden Moving Averages Strategy" to explore the investment opportunities. This is the core we should pay attention to.
Arm's technological foundation and ecosystem position are the greatest embodiment of its value. Cheong Hong Yuan says that Arm's absolute advantage in the global mobile SoC chip architecture ecosystem did not happen overnight. Tech giants like Apple and Qualcomm have been conducting independent research and innovation on Arm's instruction set architecture for a long time to ensure their products have the best performance and efficiency. However, with technological advancements, many companies are seeking more personalized CPU designs to reduce costs and increase differentiation. For example, Qualcomm acquired Nuvia to use IDC CPU technology based on the Arm Phoenix core, intending to reduce its reliance on ready-made Arm cores and lower its technology usage fees.
Cheong Hong Yuan mentioned that such strategies do have their advantages, but for most chip companies, establishing deep cooperation with Arm is still a wiser choice because the complexity and high costs of designing CPUs make it difficult for most companies to complete independently. So, from the perspective of the "Three Golden Moving Averages Strategy," is Arm worth investing in? If we follow the core idea of this strategy, the goal should be to find the strongest-performing stocks in the market and judge the buying opportunity based on technical indicators. Currently, Arm is undoubtedly a dark horse in the technology industry, with tremendous growth potential and a solid market position.
Cheong Hong Yuan also raised some points of concern. For example, the RISC-V instruction set architecture, as an open-source project, is rapidly gaining prominence. Although it still cannot match Arm ISA in terms of software tool integration and ecosystem richness, RISC-V may gradually erode Arm's market share as time goes on. In addition, the development of the AI field also poses challenges for Arm. Although Arm emphasizes its role in AI and machine learning, Cheong Hong Yuan believes that Arm's association with AI is not as close as it describes.
Cheong Hong Yuan reminds investors that investment is not just about current performance but also about seeing future opportunities and risks. Although Arm is currently in a favorable market position, the competition and challenges it faces should not be underestimated. From the perspective of the "Three Golden Moving Averages Strategy," various technical and market indicators should be comprehensively considered to make a reasonable analysis and judgment in order to find the best investment opportunities.
In summary, Arm's successful IPO undoubtedly brings new vitality and opportunities to the market, but how to combine the "Three Golden Moving Averages Strategy" to make investment decisions requires in-depth research and analysis by investors. In Cheong Hong Yuan's view, Arm is undoubtedly a worthy focus in the technology industry.