Arm dips below IPO price as short sellers circle

Oddity Tech

21/09/2023 21:19

By Noel Randewich and Lewis Krauskopf
       Sept 21 (Reuters) - Arm Holdings'  ARM.O  stock on
Thursday dipped for the first time below its initial public
offering price, while short sellers appeared to be betting
against the chip designer just a week after its Wall Street
debut.
    Dropping for a fifth straight session, shares of
SoftBank-controlled  9984.T  Arm closed down 1.4% at $52.16
after sinking as low as $49.85, well below the $51 price set in
its IPO on Sept. 13. 
    Shares of Klaviyo  KVYO.N  which debuted on Wall Street on
Wednesday, finished up 2.9% at $33.72 versus the marketing
automation firm's $30 IPO price. 
    Grocery delivery app Instacart  CART.O , formally known as
Maplebear, ended Thursday up 1.8% at $30.65, marginally above
the $30 price set in its IPO earlier this week.
    Arm's loss on Thursday was in line with a 1.8% drop in the
Nasdaq  .IXIC  as investors fretted that the Federal Reserve's
monetary policy will remain restrictive for longer than
previously expected.
    But the weak performances of the three companies' shares
since their highly anticipated market debuts add to doubts about
whether a hoped-for revival in IPOs will materialize after a
draught of over 18 months.
    Suggesting short sellers are betting against Arm, about 14
million of its shares were on loan, equivalent to 8% of the
stock's free float, data and analytics company Ortex said. That
was up from roughly 5% a day earlier.
    Short sellers borrow stocks to short them, and the
relationship between shares on loan and shorted is normally
close, according to Ortex.
    Arm shares appear highly shorted compared to other recent
IPOs. Seven days after their respective IPOs, which is the
current timeline for Arm, software company Simpple  SPPL.O  had
3.1% of its free float on loan, while beauty products seller
Oddity Tech  ODD.O  had only 0.3% of its float on loan,
according to Ortex.
    "The short interest at the moment is one of the highest
(recently) we have seen a week after an IPO," said Ortex
co-founder Peter Hillerberg. "It seems to indicate a negative
view from some market participants."
    Wall Street's steep sell-off in 2022, along with rising
interest rates and fears of a potential U.S. recession, crushed
valuations of companies planning to list their shares.
    The 10 biggest U.S. initial public offerings of the past
four years were down an average of 47% from the closing price on
their first day of trading, according to a Reuters analysis of
LSEG data earlier this month.

 (Reporting by Noel Randewich and Lewis Krauskopf; editing by
Lance Tupper and Richard Chang)
 ((noel.randewich@tr.com;))