ARM IPO is 'normal,' and 10% to 15% is not a big pop, says Bullpen's Duncan Davidson
STORY. DAVID, THANK YOU FOR JOINING US TO TALK ABOUT IT. DAVID FABER. >>> ARM IS THE BIGGEST IPO IN YEARS, BUT HOW MUCH OF A BELLWETHER IS IT FOR THE REST OF THE IPOs WAITING IN THE WING? JOINING ME NOW IS BUSINESS EDITOR AT AXIOS. SINCE WE WERE JUST TALKING ABOUT SOFTBANK, DAVID, I WANT TO TALK WITH YOU. YOU’RE NOT ALL THAT IMPRESSED BY WHAT MASA HAS BEEN UP TO LATELY — DUNKIN, SORRY. BUT DO YOU THINK THAT NOW THAT IS OUT OF THE WAY, IT SHOWS THAT WE CLEARED THIS HURDLE, EVEN FOR A LISTING
THAT FELT A LITTLE DESPERATE. >> I MUST SAY I’M AMUSED TO SAY THAT A SOFTBANK RISK IN A STOCK, THAT’S A NEW ONE. BUT I SUPPOSE IT’S SENSIBLE. THIS COMPANY, ARM, IS TO SMARTPHONES WHAT INTEL IS TO PCs. IT SHOULD BE A CORE HOLDING OF MOST PORTFOLIOS IN TECH. SO I’M HAPPY THIS THING IS PUBLIC. I DON’T THINK MASA IS GOING TO SELL. I THINK HE CAN LEVERAGE HIS POSITION TO DO OTHER THINGS, WHICH IS PROBABLY WHAT HIS REAL PLAN IS. I WILL SAY THIS, THOUGH, THIS IPO IS NORMAL. IT GOES OFF 10%, MAYBE 15%,
18%. THAT’S A NORMAL IPO. BUT IT’S NOT BIG POP. SO I THINK WE’RE ALL WAITING FOR NEXT WEEK WITH — WHAT
THAT THIS ONE, ARM, DIDN’T GET — FACE MAJOR HEAD WINDS WAS IMPORTANT. I THINK THAT’S TRUE. IN OTHER WORDS, I DON’T THINK ARM SUCCEEDING DOING THIS NORMAL IPO IS TAILWINDS FOR OTHERS. BUT IF IT WAS GETTING CRUSHED, YOU KNOW, IF IT WAS NOW TRADING DOWN AT $40 A SHARE OR SOMETHING, THAT WOULD HAVE G K GREEKED OUT THE OTHERS. >> AND PROBABLY TURNED INVESTORS OFF. SO IT’S CLAVIO, BUT NOW THAT WE KNOW THAT THE MARKET CAN DIGEST THIS MEGA IPO, INSTACART IS MUCH SMALLER. CLAVIO, I’M NOT SURE WHAT SIZE THEY ARE LOOKING FOR, BUT DOES
THIS ENTICE STRIPE AND OTHERS TO SAY THIS IS THE WINDOW? >> IT SHOULD. YOU HAVE A LOT OF COMPANIES — DATA BRICKS TODAY, WHICH IS A PRIVATELY RANKED COMPANY, SPEAKING TO THEIR CEO LAST NIGHT SAYING WHY HAVEN’T YOU GONE PUBLIC? HE SAID WELL, NOBODY HAS GONE PUBLIC. HE DIDN’T SAY WE’RE SCARED OF THE MARKET, BUT HE WANTS TO WATCH OTHERS. HERE WE GO. ARM TODAY, A COUPLE NEXT WEEK. BIRKENSTOCK ISN’T THE SAME AS A CHIP OR AI COMPANY, BUT IT REFLECTS IT AND INVESTORS ARE WILLING TO BUY NEW ISSUES. YOU CAN’T WAIT TOO LONG WHEN
AN IPO IS OPEN. YOU CAN END UP WITH A DROUGHT. >> DUNCAN, I WAS THINKING ABOUT THE INSTACART INVESTORS, PRIVATE MARKETS, WHO GAVE IT THAT $39 BILLION VALUATION A COUPLE OF YEARS AGO. AND IT’S NOW WORTH $9 BILLION. THERE IS A LOT OF LOSSES IN SILICON VALLEY, OR AMONKEYPOX THESE PRIVATE EQUITY FIRM FOR OTHERS WHOSE BUBBLES HAVE BURST A LITTLE BIT. >> IN GENERAL, IT’S MUCH LOWER THAN A $39 BILLION VALUATION. SO IN MOST OF THESE STOCKS, ONE OF THE PROBLEMS IN THIS ERA IS IT’S TAKING SO LONG TO GO PUBLIC. YOU ARE SITTING ON
THESE THINGS MORE THAN WHAT YOU HAVE DONE 25 YEARS AGO. SO IT’S GOOD TO GET OUT. >> THAT SAID, I GUESS THE QUESTION I’M ASKING, ARE THESE MUTED IPOs FOR THE PUBLIC MARKETS, DUNCAN, BETTER FOR THE RETAIL INVESTOR THAN A HYPE CYCLE OR VALUATION? I MEAN, THE RETAIL INVESTOR EASILY IN 2021 WOULD HAVE BEEN THE IPO CUSTOMER FOR INSTACART IF THEY HAD CHOSEN TO GO PUBLIC. SO IT’S ALMOST LIKE WE HAVE TURNED THE TIDE HERE, WHERE THOSE TAKING LOSSES IN A MUTED IPO SEEM TO BE SOME OF THE LATER STAGE PRIVATE INVESTORS AND NOT SO
MUCH THE PUBLIC. >> NO QUESTION THAT DELAYING IPOs AND HAVING THEM SELL AT BUBBLE VALUATIONS IS NOT GOOD FOR THE RETAIL INVESTOR. THEY USED TO GET IN MUCH QUICKER AND MAKE A KILLING. BUT NOW THEY’RE WAITING. I THINK SOME OF THESE STOCKS WILL SHOW SOME OF THE POP WE’VE ALL WISHED TO SEE IN TECH STOCKS. MY ONLY CAUTION IS THIS — NO MATTER WHAT MASA SAYS, ARM IS NOT AN AI STORY. MOST OF THE COMPANIES WE COMING OUT ON THE LIST ARE NOT AI STORIES. IT MAY
