In the world of Wall Street, investment banks ability to generate high profits is dependent on the market rising over the long term as well as new issues coming to market. This year the new issue market or the IPO market has been slow and Wall Street firms have laid off investment bankers. There was hope for a really good quarter when Arm, a chip maker headquartered in London, England sold shares into the Nasdaq Stock Exchange.

In an article by Erin Griffith and Don Clark of the New York Times News Service, when Arm went public, the shares increase in value or traded up. This lead to the notion that other companies may want to sell shares into demand from investors.

Arm is owned by SoftBank. The company was founded in 1990 in Cambridge and sells blueprints of a part of a chip known as a processor core. Arm’s chip designs are used in smartphones, but the company says its chips can be used in the Artificial Intelligence or AI wave sweeping the world.

SoftBank of Japan bought Arm in 2016 for $32 billion and retains a majority stake after the IPO. In 2020, Nvidia reached a deal to buy it for $40 billion, but British regulators said no.

CEO Rene Haas noted Arm is diversifying to place its technology in myriad of other products equipped with some level of computing power, including cars, consumer products and data centers. The company is not receiving any proceeds from the offering since all the shares sold were owned by SoftBank. The company does have $2 billion in cash and short-term investments.

Linking to dividend paying stocks, there are many different parts of the stock market and as your dividends grow you have the option to buy various products. Some are wonderful, some you want to stay away from, but for a market to operate lots of products are needed. When a company goes public and its price goes up, it was considered to be undervalued or people believe in the long-term growth of the company. With dividend paying stocks you believe in the long-term operations of the company to stay profitable and with profits come higher stock prices.

There are more questions than answers, till the next time – to raising questions.