ARM (NASDAQ:ARM) Shares Gap Down - Time to Sell?

Key Points

• Shares of ARM gapped down Monday, opening at $224.49 after a $234.81 close and trading near $212.82 — an intraday drop of about 8.9% on heavy volume.
• Analysts maintain a consensus "Moderate Buy" with a $174.83 target, yet ARM trades well above that target and shows a stretched valuation (PE ~285, beta 3.33), signaling elevated expectations.
• Insiders have been selling: the CEO and CFO executed Rule 10b5-1 sales recently, with insiders disposing of ~83,712 shares (~$13.6M) in the last 90 days, while institutional ownership is only about 7.5%.

Shares of ARM Holdings PLC Sponsored ADR (NASDAQ:ARM - Get Free Report) gapped down before the market opened on Monday . The stock had previously closed at $234.81, but opened at $224.49. ARM shares last traded at $212.8160, with a volume of 3,627,647 shares trading hands.

Analyst Upgrades and Downgrades

ARM has been the topic of a number of research analyst reports. Mizuho boosted their target price on ARM from $160.00 to $230.00 and gave the stock an "outperform" rating in a research note on Monday, April 6th. Barclays restated an "overweight" rating and issued a $165.00 target price on shares of ARM in a research note on Thursday, March 26th. JPMorgan Chase & Co. cut their target price on ARM from $180.00 to $145.00 and set an "overweight" rating on the stock in a research note on Thursday, February 5th. Citigroup downgraded ARM from a "buy" rating to a "hold" rating in a research note on Tuesday, January 13th. Finally, Oddo Bhf set a $170.00 price target on shares of ARM in a report on Monday, January 5th. Eighteen equities research analysts have rated the stock with a Buy rating, six have given a Hold rating and one has issued a Sell rating to the stock. Based on data from MarketBeat, the company has a consensus rating of "Moderate Buy" and a consensus target price of $174.83.

ARM Stock Down 8.9%

The stock has a 50-day simple moving average of $142.19 and a two-hundred day simple moving average of $136.21. The firm has a market cap of $225.96 billion, a PE ratio of 285.16, a P/E/G ratio of 10.58 and a beta of 3.33.

ARM (NASDAQ:ARM - Get Free Report) last released its quarterly earnings results on Thursday, February 5th. The company reported $0.43 earnings per share for the quarter, beating analysts' consensus estimates of $0.41 by $0.02. ARM had a return on equity of 14.01% and a net margin of 17.15%.The business had revenue of $1.24 billion for the quarter, compared to the consensus estimate of $1.23 billion. During the same quarter last year, the business posted $0.39 earnings per share. The company's revenue for the quarter was up 26.3% on a year-over-year basis. Research analysts expect that ARM Holdings PLC Sponsored ADR will post 0.85 earnings per share for the current year.

Insider Transactions at ARM

In other news, CEO Rene A. Haas sold 9,299 shares of the firm's stock in a transaction dated Tuesday, April 14th. The stock was sold at an average price of $160.85, for a total transaction of $1,495,744.15. Following the transaction, the chief executive officer directly owned 273,680 shares of the company's stock, valued at approximately $44,021,428. This trade represents a 3.29% decrease in their ownership of the stock. The sale was disclosed in a filing with the Securities & Exchange Commission, which can be accessed through this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, CFO Jason Child sold 21,280 shares of the firm's stock in a transaction dated Wednesday, April 22nd. The shares were sold at an average price of $180.00, for a total value of $3,830,400.00. Following the transaction, the chief financial officer directly owned 153,426 shares in the company, valued at $27,616,680. This trade represents a 12.18% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders have sold 83,712 shares of company stock worth $13,614,730 in the last 90 days.

Institutional Inflows and Outflows

Institutional investors and hedge funds have recently modified their holdings of the stock. GAMMA Investing LLC grew its stake in shares of ARM by 126.0% during the third quarter. GAMMA Investing LLC now owns 174 shares of the company's stock valued at $25,000 after buying an additional 97 shares during the last quarter. Grey Fox Wealth Advisors LLC bought a new position in shares of ARM during the third quarter valued at about $28,000. Syntax Research Inc. bought a new position in shares of ARM during the first quarter valued at about $30,000. Mcguire Capital Advisors Inc. bought a new position in shares of ARM during the fourth quarter valued at about $30,000. Finally, Navalign LLC bought a new position in shares of ARM during the fourth quarter valued at about $33,000. 7.53% of the stock is owned by institutional investors.

ARM Company Profile

Arm Limited NASDAQ: ARM is a global semiconductor IP company best known for designing energy-efficient processor architectures and related technologies that underpin a wide range of computing devices. Founded in 1990 as a joint venture between Acorn Computers, Apple and VLSI Technology and headquartered in Cambridge, England, Arm develops the ARM instruction set architectures and core processor designs that chipmakers license and integrate into custom system-on-chip (SoC) products. The company operates a licensing and royalty business model rather than manufacturing chips itself.

Arm's product portfolio includes CPU core families (such as Cortex and Neoverse lines), GPU and multimedia IP (Mali), neural processing units (Ethos) and a suite of system and physical IP blocks.

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