IPO Market Will Need More Than Arm's Listing to Bring It Back to Life

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Arm Holdings Ltd.’s highly anticipated IPO has sparked hopes that the moribund market for new listings will spring back to life. Not so fast, says a cohort of Wall Street pros.

All the problems that have waylaid the market for initial public offerings over the past 18 months — from an aggressive Federal Reserve to the threat of a global recession — remain in place, they say. Arm is different than other IPO wannabes that would raise a fraction that its reportedly seeking. For one, it’s massive in comparison, with $2.68 billion in sales and $524 million in net income last year. More importantly, it toils in the white-hot market for artificial intelligence.

“If Arm goes well — and I certainly hope it does — I just don’t think it’ll create a euphoria that all of the others will benefit from,” said David DiPietro, head of private equity at T. Rowe Price. “That sentiment is more driven by the overall market backdrop, and as the market retraces ground there’s a bit more caution than we felt a month or so ago.”

Arm had been aiming to raise $8 billion to $10 billion, but that target could be trimmed back since SoftBank decided to hold onto more of the company. Still, it’s expected to be the year’s largest IPO, potentially opening the door for companies that have been waiting in the wings. Online grocery-delivery firm Instacart Inc., marketing and data automation provider Klaviyo and footwear maker Birkenstock are among those Wall Street expects may follow Arm in filing to go public.

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