ARM (NASDAQ:ARM) Stock Falls 6.5% - Here's What Happened

Key Points

• ARM shares fell 6.5% to $275.29, with trading volume below its average. The stock’s high valuation includes a P/E ratio of 283.81 and a beta of 3.78, indicating significant volatility.
• Analyst sentiment remains broadly positive, with a “Moderate Buy” consensus and an average price target of $303.32. Recent targets ranged from $250 to $430, reflecting considerable disagreement over the stock’s valuation.
• ARM recently beat quarterly expectations, reporting $0.45 in EPS and $1.29 billion in revenue, up 22.4% year over year. However, CFO Jason Child sold 10,400 shares under a pre-arranged trading plan.

Arm Holdings PLC Sponsored ADR (NASDAQ:ARM - Get Free Report)'s stock price dropped 6.5% on Thursday. The stock traded as low as $270.26 and last traded at $275.29. 6,063,281 shares were traded during trading, a decline of 21% from the average session volume of 7,662,422 shares. The stock had previously closed at $294.37.

Analyst Upgrades and Downgrades

A number of brokerages have issued reports on ARM. Piper Sandler began coverage on ARM in a research note on Wednesday, September 9th. They issued an "overweight" rating and a $320.00 price target for the company. HSBC lowered ARM from a "buy" rating to a "hold" rating and upped their price objective for the stock from $255.00 to $315.00 in a research note on Tuesday, July 14th. Rosenblatt Securities cut their target price on ARM from $270.00 to $250.00 and set a "buy" rating for the company in a research report on Friday, July 31st. KeyCorp lifted their target price on ARM from $300.00 to $430.00 and gave the company an "overweight" rating in a research note on Tuesday, July 14th. Finally, TD Cowen dropped their price target on ARM from $475.00 to $350.00 and set a "buy" rating for the company in a research note on Thursday, July 30th. One analyst has rated the stock with a Strong Buy rating, eighteen have issued a Buy rating, seven have given a Hold rating and one has given a Sell rating to the stock. According to data from MarketBeat, the stock presently has an average rating of "Moderate Buy" and an average price target of $303.32.

ARM Trading Down 6.5%

The stock has a market capitalization of $294.03 billion, a PE ratio of 283.81, a PEG ratio of 8.97 and a beta of 3.78. The business's 50 day moving average is $268.93 and its 200 day moving average is $264.86.

ARM (NASDAQ:ARM - Get Free Report) last posted its quarterly earnings data on Thursday, July 30th. The company reported $0.45 earnings per share for the quarter, topping analysts' consensus estimates of $0.40 by $0.05. ARM had a net margin of 20.25% and a return on equity of 12.24%. The company had revenue of $1.29 billion for the quarter, compared to analyst estimates of $1.26 billion. During the same period in the prior year, the company posted $0.35 EPS. The firm's revenue for the quarter was up 22.4% on a year-over-year basis. As a group, analysts anticipate that Arm Holdings PLC Sponsored ADR will post 1.15 EPS for the current year.

Insider Activity at ARM

In other news, CFO Jason Child sold 10,400 shares of ARM stock in a transaction that occurred on Monday, September 21st. The shares were sold at an average price of $300.00, for a total transaction of $3,120,000.00. Following the completion of the sale, the chief financial officer owned 153,442 shares of the company's stock, valued at approximately $46,032,600. The trade was a 6.35% decrease in their ownership of the stock. The transaction was disclosed in a legal filing with the SEC, which is accessible through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan.

Institutional Investors Weigh In On ARM

Several hedge funds have recently modified their holdings of the business. Paragon Capital Management Inc. boosted its holdings in ARM by 40.4% in the first quarter. Paragon Capital Management Inc. now owns 10,609 shares of the company's stock worth $1,605,000 after acquiring an additional 3,055 shares in the last quarter. QRG Capital Management Inc. lifted its stake in shares of ARM by 32.1% during the second quarter. QRG Capital Management Inc. now owns 9,591 shares of the company's stock worth $3,401,000 after buying an additional 2,330 shares during the period. BlueCrest Capital Management Ltd acquired a new stake in shares of ARM during the second quarter worth $1,359,000. Employees Provident Fund Board purchased a new stake in shares of ARM during the fourth quarter valued at $120,241,000. Finally, Wilmar Advisors LLC acquired a new position in shares of ARM in the 4th quarter valued at $328,000. Hedge funds and other institutional investors own 7.53% of the company's stock.

About ARM

Arm Holdings plc NASDAQ: ARM is a semiconductor and software design company that develops intellectual property used to create energy-efficient computing products. Arm does not generally manufacture chips; instead, it licenses processor architectures, CPU cores, graphics technologies and related system IP to semiconductor companies and original equipment manufacturers, which incorporate them into their own products.

The company's offerings include the Cortex family of CPUs for mobile, consumer, automotive and embedded applications; Neoverse platforms for cloud and data-center infrastructure; Mali graphics processing units; and Ethos neural processing units designed for artificial intelligence and machine-learning workloads.

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