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  Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our&nbsp;<a href="https://tokenist.com/terms-of-service/" style="text-decoration:underline;color:#3c7b7b" target="_blank" rel="noopener noreferrer nofollow" class="deco-link">website policy</a>&nbsp;prior to making financial decisions. 
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<p class="has-drop-cap">Shares of Arm <a aria-label="rallied 25% (opens in a new tab)" href="https://www.cnbc.com/2023/09/14/arm-ipo-arm-starts-trading-on-the-nasdaq-in-win-for-softbank.html" target="_blank" rel="noopener noreferrer nofollow" class="deco-link">rallied 25%</a> at its long-awaited market debut on September 14, bringing the company’s valuation to more than $65 billion. However, the stock experienced a pullback on Monday, dipping up to 4% in the premarket after Bernstein’s analysts set the price target of $46 apiece, 24% lower than the Friday closing price of $60.75.</p> 
<h3 id="arm-down-4-in-monday-premarket">ARM Down 4% in Monday Premarket</h3> 
<p>Following a successful debut day on Sept. 14, shares of chipmaker ARM embarked on a downward trajectory in premarket trading Monday. The stock was down up to 4% in the market pre-op at $58 per share.</p> 
<p>The drop comes after ARM witnessed an impressive 25% surge at its initial public offering (IPO), with the initial selling price of $51 apiece. The stock ended the day at $63.59, taking the chip manufacturer’s valuation to $65 billion.&nbsp;</p> 
<p>Arm’s successful listing <a href="https://tokenist.com/arms-listing-can-be-the-tipping-point-for-ipos-to-make-a-comeback/" rel="noopener noreferrer nofollow" class="deco-link">provided investors with a necessary relief</a> following a nearly 2-year drought in the IPO market. The stock’s debut day victory <a href="https://tokenist.com/instacart-seeks-a-10b-valuation-after-arms-successful-ipo-report/" rel="noopener noreferrer nofollow" class="deco-link">gave confidence to Instacart</a> – a delivery company also set to go public in September – to raise its IPO target price.</p> 
<p>The demand for IPOs has hit the bottom after the 2021 euphoria, mainly due to record-high interest rates imposed by the global central banks to fight peaking inflation last year. Interestingly, even though Arm attracted robust investor interest, the stock is <a href="https://tokenist.com/why-some-etfs-will-have-to-miss-out-on-arms-ipo/" rel="noopener noreferrer nofollow" class="deco-link">unlikely to be included in major stock market indices and exchange-traded funds</a> (ETFs) due to several issues.&nbsp;</p> 
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<h3 id="analysts-cautious-on-arm-s-massive-valuation">Analysts Cautious on Arm’s Massive Valuation</h3> 
<p>Meanwhile, the decline in the Monday premarket points to reasons for Arm’s investors to be cautious, signaling potential downside risks. At its hefty valuation of over $60 billion and a significant premium on a price-to-earnings basis to other chipmakers, some market watchers have taken a more prudent stance regarding the stock’s prospects.&nbsp;</p> 
<blockquote class="wp-block-quote"> 
 <p>“With the deal six times oversubscribed it looks like investors viewed the Arm IPO as an AI play and forgot to look at the price tag.”</p> <cite>– <a href="https://www.barrons.com/articles/arm-stock-ipo-sell-buy-56bde6f0" target="_blank" rel="noopener noreferrer nofollow" class="deco-link">said Daniel Morgan</a>, senior portfolio manager at Synovus Trust.</cite> 
</blockquote> 
<p>Meanwhile, Bernstein analyst Sara Russo sees cloud computing as a potential growth catalyst for Arm. The strategist predicts Arm chips will account for 15% of the cloud computing market in 2025 from 10% last year. However, the company will need much more than that to live up to the expectations the market has now set.&nbsp;</p> 
<p>Russo wrote last week in a note to investors that Arm’s current valuation “is driven primarily by their ability to realize royalty pricing increases.” The strategist valued the company at $46 billion, nearly 30% less than its IPO closing price.&nbsp;</p> 
<p>Bernstein rated ARM’s stock as “Underperform” after the Thursday listing, setting a price target of $46 per share.&nbsp;</p> 
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<p><em><strong>Despite analysts’ warnings, do you think Arm will show resilience in the coming months? Let us know in the comments below.&nbsp;</strong></em></p> 
<p>The post <a rel="noopener noreferrer nofollow" href="https://tokenist.com/arms-shares-continue-to-fall-in-premarket-bernstein-sets-46-target/">Arm’s Shares Continue to Fall in Premarket, Bernstein Sets $46 Target</a> appeared first on <a rel="noopener noreferrer nofollow" href="https://tokenist.com">Tokenist</a>.</p>

Arm’s Shares Continue to Fall in Premarket, Bernstein Sets $46 Target

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