After a lean year for new stock issuance, the rousing success of therecentArm Holdingsinitial public offering (IPO) could be the harbinger of a long-awaited revival in the market for corporate shares.The newly minted chip designer’s debut was nothing short of remarkable, with shares surging more than 60 percent on their first day of trading, prompting many market observers to suggest that companies across the globe may now rush to take advantage of the smartly reviving economic conditions.
1. The Arrival of Arm: A Corporate Milestone
The arrival of Arm marked the dawn of a new age for the company. It was the first major conquest for the firm that would lead to a plethora of successes in the coming years. Here are some of the key aspects of this corporate milestone:
- Tapping into the internet of things: Arm was the first step towards the company’s involvement in the IoT (Internet of Things) revolution. This presented an exciting opportunity to build new products that tapped into the latest technologies.
- Gaining access to a new market: By acquiring Arm, the company opened itself up to an entirely new customer base. This meant that the company had a chance to expand its business and explore a wider customer base.
- Global reach: With the addition of Arm, the company was able to build a global presence and set up offices and manufacturing plants in countries around the world.
In addition to these major advantages, Arm also served as a powerful symbol of the company’s growth and its commitment to the industry. With the help of Arm, the company was able to take its operations to the next level, making it a major player in the corporate world.
2. The Benefits of a Successful IPO
A successful IPO can have a major impact on a company’s future and prospect. When an IPO is successful, it provides funds for the company to use for further expansion and/or development of its products and services. It also provides a measure of legitimacy and security for the company, giving investors confidence that the company is established and reliable. Moreover, a successful IPO often allows a company to acquire additional resources, such as talent, technology, and capital.
A successful IPO will also provide greater liquidity to the company’s stock. This liquidity is beneficial to shareholders, as it helps them diversify their portfolios, allowing them to invest in various sectors. Also, a successful IPO often leads to increased media attention, providing greater visibility and recognition for the company, thus leading to higher sales and value. Furthermore, a successful IPO may provide the company tax benefits related to capital gains and long-term strategies.
- Increased Funds: IPA provides funds for expansion and development of products and services.
- Greater Liquidity of Stock: Liquidity is beneficial to shareholders, as it helps diversify their portfolios.
- Increased Visibility: Increased media attention helps to increase visibility of company.
- Tax Benefits: A successful IPO may provide the company tax benefits related to capital gains and long-term strategies.
3. IPO Drought Drawing to a Close?
After the rocky start to 2020, the IPO drought looks set to abate – at least for the remainder of the year. Several big names – including Airbnb, DoorDash, and C3.ai – have already made plans to list on public stock exchanges, and many more are likely to follow in their wake.
The rush to list is no surprise given the strong performance of the stock market so far. After climbing back from pandemic lows, the S&P 500 has gained over 5% since the start of the year. Companies that now feel confident to go public will see a buoyant market in which to list, one that offers the potential for stronger returns.
- Airbnb: Already filed to go public
- DoorDash: Announced IPO plans
- C3.ai: Aiming for a 2021 debut
The rising share price has also encouraged companies to stay private longer as they hold out to benefit from higher valuations. In addition, venture capital firms have been more willing to provide liquidity for portfolio companies to stay private. Now with the stock market strong and the economy recovering, the IPO logjam looks like it’s about to break open – giving investors more opportunity to get involved in the market.
4. Opening the Door for a New Era of Investing
With the growing presence of digital technology, a lot of people are now able to access the markets and become investors. This shift has opened the door for millions of people to invest in the stock market, as well as a variety of other asset classes. No longer is investing an exclusive game of the wealthy few. Now, almost anyone can get involved, bringing an air of democratization to the world of finance.
Engaging Both Institutional and Retail Investors
In addition to individual investors, new technology is also allowing institutional investors to move faster and take bigger risks. Financial companies are deploying both AI and crowdsourcing to guide their decisions, moving capital to markets that are often overlooked by more traditional investors. This shift is creating a new way of looking at the investment sector, and providing unprecedented opportunities to those willing to embrace the new digital era.
- Individuals now have unprecedented access to the markets, opening the door for mass democratization of the sector.
- Institutional investors are able to leverage both AI and crowdsourcing to make bigger risks in previously untapped markets.
Arms Corp’s highly-anticipated and well-received IPO undoubtedly has the city of New York buzzing with excitement. Whether or not this signals the end of the IPO drought, one thing is for sure: this strong debut marks the start of a promising future for the company, and further demonstrates the staying power of innovation in the tech sector.