This ain’t a scene, it’s an Arms race
This ain’t a scene, it’s an Arms race
Bankers have stuck a hefty price tag on Arm Limited. But it doesn't matter. The market will pay up.
Fall Out Boy, an American punk-pop band, said it best when they sang:
"And don't really care which side wins
Long as the room keeps singing
That's just the business I'm in"
— This Ain't a Scene, It's an Arms Race, Fall Out Boy, 2007
Bankers should re-listen to some '00s pop-punk—there are lessons in there. Taking a company public is lucrative. It doesn't matter which side wins as long as you ensure the markets keep dancing.
Masayoshi Son, a tech investor from Japan who runs Softbank, has been listening too. Arm Limited, a semiconductor company Softbank owns, filed to go public the other week. But bankers have attached a hefty $64bn price tag to the company. The price is overcooked, but that doesn't matter. The market will accept it as chip-maker valuations are sky-high.
At $64bn, the company is expensive. Using generous assumptions, I value Arm's equity at $33bn-38bn. I assumed the firm's top line would grow three times faster than the semiconductor market. Analys…