Nvidia stock falls after report says company could give up on Arm deal

Dow Jones2022-01-25

MW Nvidia stock falls after report says company could give up on Arm deal

By Emily Bary

'It feels safe to say that virtually no one in the investment community has expected it to close anyway,' analyst says

Shares of Nvidia Corp. were declining in premarket trading Tuesday after a report indicated that the company is preparing to give up on its planned purchase of Arm Ltd. from SoftBank Group Corp.

The semiconductor company has faced regulatory opposition to the $40 billion combination and has told partners that it doesn't expect that the deal will close, according to Bloomberg, which cites an unnamed source.

Additionally, SoftBank is considering turning Arm public through an initial public offering assuming that the deal doesn't occur, per the Bloomberg report.

Shares of Nvidia $(NVDA)$ were down nearly 4% premarket.

Representatives from Nvidia didn't immediately respond to MarketWatch's request for comment on the report.

The Federal Trade Commission sued in December to block Nvidia's proposed Arm takeover and the U.K. opened an investigation into the national-security impacts of the deal earlier in 2021.

Opinion: Nvidia's deal for ARM is dead -- how long until CEO Jensen Huang admits it?

Bernstein analyst Stacy Rasgon wrote following the Bloomberg report that he doubted investors would be surprised if the deal fell through given heavy pushback from regulators and customers.

"It feels safe to say that virtually no one in the investment community has expected it to close anyway," he said in a note to clients.

Subscribe: Want intel on all the news moving markets? Sign up for our daily Need to Know newsletter

Rasgon added that while he thought Arm could have been a "wonderful" asset for Nvidia, he doesn't think that the company needs Arm for success.

"In our opinion, the impetus for the deal was to help create and drive a broader ecosystem for Arm particularly in the datacenter; NVDA presumably can and will continue standalone their efforts here though it is possible such efforts could have been accelerated through owning the asset," he wrote.

Shares of Nvidia are up 0.9% on a three-month basis and 71.2% on a 12-month basis. The S&P 500 has dipped 3.4% over the past three months but risen 14.4% on a 12-month basis.

-Emily Bary

$(END)$ Dow Jones Newswires

January 25, 2022 09:19 ET (14:19 GMT)

At the request of the copyright holder, you need to log in to view this content

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

Tanyl
2022-01-25
Tanyl
It is time ti buy Nvidia
Maydelyn
2022-01-25
Maydelyn
It's too hard for the ARM acquisition to take place. There are too many interventions by various countries' regulators. I have never pin hope it can go through. However, I still think Nvidia is a good long term investment!