Investors should avoid Arm IPO, New Constructs says

Chip-design giant Arm Holdings is preparing for its initial public offering.

As Arm Holdings prepares for its eagerly anticipated initial public offering, independent equity research firm New Constructs warns that the valuation is disconnected from the chip giant’s fundamentals.

That valuation would be based more on owner SoftBank Group Corp.’s 9984, +1.97% 9434, +1.28% “self-dealing” in private markets “to manipulate the valuation higher” than on Arm’s fundamentals, New Constructs CEO David Trainer said in a note. SoftBank, he said, increased WeWork Inc.’s WE, +70.36% valuation prior to the flexible-office-space company’s IPO in 2021.

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