ARM (NASDAQ:ARM) Shares Down 6.9% – Time to Sell?

Arm Holdings PLC Sponsored ADR (NASDAQ:ARM) shares dropped 6.9% on Friday. The company traded as low as $226.65 and last traded at $227.80. Approximately 4,738,811 shares traded hands during mid-day trading, a decline of 38% from the average daily volume of 7,595,997 shares. The stock had previously closed at $244.79.

Key ARM News

Here are the key news stories impacting ARM this week:

• Positive Sentiment: Arm’s annualized contract value increased 13% to $1.73 billion, indicating continued licensing momentum ahead of its fiscal second-quarter results. This provides evidence that demand for Arm’s chip architecture remains healthy. Can ARM’s 13% Contract Value Growth Sustain Momentum in Q2?
• Positive Sentiment: Microsoft is adding native Python support to Windows on Arm PCs, potentially improving software compatibility and adoption of Arm-based computers beyond smartphones. Microsoft Brings Native Python Support to Windows on Arm PCs
• Neutral Sentiment: A Delaware jury found that Qualcomm breached Arm’s licensing agreement but awarded Qualcomm only $2 in damages. The limited verdict leaves the broader dispute unresolved, with another court proceeding or trial likely regarding Qualcomm’s use of Arm technology in custom chips. Qualcomm awarded $2 in battle against Arm, but another court date is likely
• Negative Sentiment: The Qualcomm litigation is adding uncertainty to Arm’s licensing relationships and helped intensify selling across chip stocks, including Arm, AMD and Taiwan Semiconductor. Arm and AMD Fall as Qualcomm Verdict Adds to Chip Selloff
• Negative Sentiment: Investors are also questioning ARM’s valuation after its more-than-120% year-to-date advance. With a very high earnings multiple, the stock is vulnerable to profit-taking and disappointing guidance even as Arm expands into AI data centers. The Next AI Stock Wall Street Is Starting to Pay Attention To

Analyst Ratings Changes

A number of analysts have commented on ARM shares. UBS Group reduced their price objective on shares of ARM from $360.00 to $320.00 and set a “buy” rating for the company in a research note on Thursday, July 30th. Morgan Stanley lifted their target price on shares of ARM from $202.00 to $212.00 and gave the stock an “equal weight” rating in a research report on Thursday, July 30th. Wells Fargo & Company cut their price target on shares of ARM from $350.00 to $280.00 and set an “overweight” rating on the stock in a report on Thursday, July 30th. Weiss Ratings restated a “hold (c)” rating on shares of ARM in a report on Thursday. Finally, HSBC downgraded shares of ARM from a “buy” rating to a “hold” rating and upped their price target for the company from $255.00 to $315.00 in a research report on Tuesday, July 14th. 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 assigned a Sell rating to the company’s stock. According to MarketBeat.com, the company currently has an average rating of “Moderate Buy” and a consensus price target of $303.32.

ARM Price Performance

The firm has a market cap of $243.31 billion, a PE ratio of 234.85, a P/E/G ratio of 7.06 and a beta of 3.78. The business has a fifty day moving average price of $268.36 and a two-hundred day moving average price of $269.61.

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

Insiders Place Their Bets

In other news, CFO Jason Child sold 10,400 shares of the company’s stock in a transaction dated Monday, September 21st. The stock was sold at an average price of $300.00, for a total value of $3,120,000.00. Following the transaction, the chief financial officer owned 153,442 shares in the company, valued at $46,032,600. This represents a 6.35% decrease in their position. The sale was disclosed in a document filed with the Securities & Exchange Commission, which is available at this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan.

Institutional Trading of ARM

A number of hedge funds have recently made changes to their positions in the stock. Focus Financial Network Inc. raised its position in shares of ARM by 0.9% during the third quarter. Focus Financial Network Inc. now owns 4,686 shares of the company’s stock worth $1,357,000 after purchasing an additional 40 shares during the period. GAMMA Investing LLC grew its position in shares of ARM by 18.7% in the 2nd quarter. GAMMA Investing LLC now owns 406 shares of the company’s stock valued at $144,000 after purchasing an additional 64 shares during the period. Allworth Financial LP grew its position in shares of ARM by 2.9% in the 2nd quarter. Allworth Financial LP now owns 2,269 shares of the company’s stock valued at $804,000 after purchasing an additional 65 shares during the period. MCF Advisors LLC increased its stake in ARM by 11.7% during the 2nd quarter. MCF Advisors LLC now owns 764 shares of the company’s stock worth $271,000 after purchasing an additional 80 shares in the last quarter. Finally, AdvisorNet Financial Inc increased its stake in ARM by 5.4% during the 3rd quarter. AdvisorNet Financial Inc now owns 1,841 shares of the company’s stock worth $533,000 after purchasing an additional 94 shares in the last quarter. 7.53% of the stock is owned by hedge funds and other institutional investors.

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.