Analysis: For retail investors, jumping on Arm's blockbuster IPO is a risky business

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Retail traders getting their first bite at Arm Holdings' highly anticipated public offering when the British chip designer begins trading this week should beware: individual investors often get burned when they jump on hot listings.

this week should beware: individual investors often get burned when they jump on hot listings.

Arm's goal of raising around $5 billion in New York in what might be the biggest IPO of 2023 follows other major listings in recent years whose returns have mostly disappointed., is not well-known among consumers, it is focusing its IPO marketing efforts on institutional investors, people familiar with the deal said.

That leaves Main Street investors to buy Arm shares at potentially higher prices once they begin trading. With retail investors holding individual stocks for less than a year on average, recent history suggests they could lose money, a Reuters analysis shows.The 10 biggest U.S. initial public offerings of the past four years are down an average of 47% from the closing price on their first day of trading, according to the analysis of LSEG data as of Friday.

 

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