SoftBank, holding 90% of the shares of chip design company Arm, is facing a dilemma as the stock price doubles and the lock-up period expires: to sell or not to sell?
Since its listing in September last year, Arm's stock price has more than doubled. Such a price is very tempting for major shareholders. Considering the small float of Arm's shares on the market, with only 10% currently circulating, the stock price is highly sensitive. With a valuation of over 33 times the expected sales, the overall valuation is high. If major shareholders choose to reduce their holdings at this time, Arm's stock price will inevitably face significant fluctuations.
Media quoted David Mazza, Chief Strategic Officer of Roundhill Financial, as saying, &#34;If there is a company that attracts attention due to a sell-off wave caused by the expiration of the lock-up period, Arm is one of them. Even investors who are optimistic about Arm in the medium to long term should be cautious about the pressure that the unlocking may bring to the stock price.&#34;
Currently, the biggest unknown is how SoftBank plans to deal with its holding of over 900 million Arm shares. Since Arm's listing, SoftBank's stock price on the Tokyo Stock Exchange has risen by nearly 30%.
During the February earnings conference call, SoftBank avoided questions about how it plans to handle its stake, only reiterating that Arm is the &#34;most important company&#34; in the group. SoftBank stated in its recent quarterly conference call that it can &#34;utilize Arm assets in various ways,&#34; including using them as collateral for margin loans.
Some analysts believe that with Arm's stock price rising nearly 150%, SoftBank is sitting on a potential gold mine. It may take this opportunity to sell some shares to fund other investment projects or return capital to shareholders.
Arm's stock price fell 4.2% at one point on Tuesday but later recovered, closing up 2.18%, with trading volume significantly higher than the previous month.
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SoftBank is facing a "soul-searching" dilemma: to sell or not to sell?

When "doubling in six months" meets "large-scale unlocking", ARM's stock price faces a test of selling pressure.