Contributor, Benzinga
October 25, 2021
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In prior generations, the concept of self-driving cars and self-sufficient computer protocols has fascinated both scientists and American culture at large. Portrayed in endless science-fiction movies, these and other intelligent solutions were always on the cusp of development. However, available technologies at the time didn’t align with engineering ambitions — that is until the development of system-on-chip (SoC) semiconductors.

In your standard computer, the central processing unit (CPU) represents the heart and soul of the underlying system. Yet a CPU alone cannot meet the myriad demands that modern users require at frequency. Instead, computers incorporate separate components, such as a graphics processing unit (GPU), memory cards, USB controllers, power management circuits and wireless radios.

Naturally, integrating all these moving parts adds complexity to the system, in addition to ramping up physical space requirements and energy consumption. In an era where environmental, social and governance (ESG) concerns reign supreme, the beauty of SoC chips is that they can fit multiple functionalities into 1 unit. As well, such consolidation can potentially springboard innovations in artificial intelligence and machine learning that were previously unworkable.

Not surprisingly, then, SoC specialist Arteris’ upcoming initial public offering (IPO) is drawing substantial interest, not only for its own upside potential but for facilitating force multiplication for the broader technology space.

When is the Arteris IPO Date?

Because of its extraordinary relevance, particularly in light of the ongoing semiconductor supply shortage, Arteris represents one of the most hotly anticipated new public offerings to hit the IPO calendar for the week beginning Oct. 25. As such, investors should gird themselves for the real possibility of significant share price movement early on.

Arteris’ journey to the capital market began on June 11 of this year when management filed its intent to go public with the U.S. Securities and Exchange Commission (SEC). Later, Arteris filed its IPO prospectus with the regulatory agency. On the document, the company disclosed its intention to raise a total of $75 million. On Oct. 18, Arteris declared the terms of its deal, offering 5 million shares at a price range between $14 and $16 per unit.

At the midpoint of the estimated spectrum, the semiconductor specialist will command a fully diluted market value of $555 million. Jefferies Financial (NYSE: JEF), Cowen (NASDAQ: COWN) and BMO Capital Markets — the wholesale banking business of Bank of Montreal (NYSE: BMO) — are providing joint bookrunning services.

Should proceedings occur as anticipated, Arteris will price its IPO on Oct. 26, with shares — which will list on the Nasdaq exchange under the ticker symbol AIP — expected to go live on Oct. 27.

Prospective investors of AIP stock will take some encouragement that this is the year of the IPO. While a Reuters report indicated that the number of new issues slowed conspicuously in the third quarter of this year, it nevertheless stated that the “number of listings in the first 9 months of the year still was the highest since the dotcom bubble of 2000, according to Refinitiv data.”

Among the debutantes are of course semiconductor firms, which have taken advantage of the chip boom. Still, investors should be cautious about a possible IPO bubble forming. More specifically to AIP stock, the underlying firm is going up against the heavily hyped debut of GlobalFoundries, which could affect how much money flows into Arteris over its sector rival.

Arteris Financial History

While Arteris may not be the biggest tech name in town, its total addressable market (TAM) demands serious respect. Per information provided by Data Bridge Market Research, tech industry experts project that the SoC market will reach an estimated valuation of $501.8 billion by 2028. This target represents a compound annual growth rate (CAGR) of slightly over 8% between 2021 and 2028.

As the research firm explained, SoC is an integrated circuit (IC) that includes multiple electronic components, including the CPU, input and output ports, internal memory and many others. All these components are incorporated on a single and very small chip. Further, SoC “can perform numerous applications such as signal processing, wireless communication and use of artificial intelligence” among myriad other functions.

Since 2003, Arteris has attracted private funding, in total raising $52 million over 6 rounds. The last raise occurred on June 10, 2021, resulting in proceeds of $5.4 million. Notably, tech giants Qualcomm (NASDAQ: QCOM) and Synopsys (NASDAQ: SNPS) are major Arteris backers.

On the company’s financials, the SoC firm posted revenue of $31.8 million in 2020, up just a hair under 1% of the $31.5 million generated in 2019. To be fair, momentum spiked this year from the global supply chain shortage, which put a spotlight on the semiconductor industry. For the 12 months ending June 30, 2021, Arteris booked $38 million in revenue.

Nevertheless, profitability will be a substantial concern for AIP stock moving forward. On a broader scale, the amount of money moving into unprofitable companies hasn’t been this high since the dot-com bubble. Factor in the craze in cryptocurrency trading — of which the underlying fundamentals are questionable to say the least — and a possibility exists that retail investors can lose their nerve if the music ever stops.

In terms of Arteris’ own challenges with profitability, it posted operating losses of nearly $3.8 million, due primarily to an increase in research and development and general and administrative expenses. Thus, investors need to balance their optimism with the challenges this firm faces.

Arteris Potential

When assessing the upside potential of AIP stock, prospective participants can look to 2 game-changing catalysts: the immediate consideration of the global supply chain crisis and the longer-term outlook for AI and machine-learning initiatives.

First, the ongoing supply chain disruption has been severe due to its holistic nature. As The New York Times reported, factories can’t just manufacture more products because the commodities that they need — such as specialized parts and chemicals — are suffering from their own shortage and supply chain headwinds.

If that wasn’t bad enough, the Times suggests that a solution will not arrive “anytime soon.” Essentially, then, Arteris can charge whatever it wants, and its clients will gladly pay. As long as this circumstance continues, the semiconductor firm can shore up its fiscal weaknesses.

Against a longer-term framework, more companies are interested in pushing the innovative narrative forward, such as eventually commercializing autonomous vehicles. To accomplish this, however, next-generation platforms require advanced computing systems. Unlike traditional systems, SoC can quarterback technical functions on its own since the many components that it needs are located in 1 platform.

As well, the space-saving design is energy efficient, which has become a greater concern among governments and industries. With conspicuous incidences stemming from climate change preventing plausible deniability, companies have little choice but to modify their operations to reflect ESG principles. In theory, this circumstance bolsters AIP stock.

How to Buy Arteris IPO (AIP) Stock

With Arteris set to become a public entity shortly, AIP stock can be acquired at the open. While the timing may present pricing disadvantages, this process is also the most straightforward if you already know how to buy stocks. If you don’t, just follow the simple steps below.

Step 1: Pick a brokerage.

Since most brokerages offer similar financial incentives — primarily commission-free trading — it’s important to narrow your list of best brokers down to attributes that matter the most to you.

Step 2: Decide how many shares you want.

Every IPO carries a significant degree of risk. Therefore, mitigate downside threats by electing a balanced share count.

Step 3: Choose your order type.

Before placing your first order, understand these market concepts.

  • Bid: The buyer’s best offer for a stock.
  • Ask: The seller’s lowest acceptable price.
  • Spread: The difference between the bid-ask price, the spread indicates market risk as this is also the profit margin for market makers.
  • Limit order: Buy or sell requests at a predetermined price, limit orders provide transparency but no execution guarantees.
  • Market order: Market orders guarantee fulfillment but only at the current rate.
  • Stop-loss order: Stop-loss orders automatically exit your position at either a predetermined price or anything lower.
  • Stop-limit order: Stop-limit orders only leave positions at a specified price, but they also carry non-fulfillment risks.

Step 4: Execute your trade.

Follow these steps to execute a market order:

  1. Select your action type (buy or sell).
  2. Enter the shares you want to acquire (or sell).
  3. Hit the Buy (or Sell) button.

Follow the same sequence for limit orders (but include your execution price).

AIP Restrictions for Retail Investors

Before participating in an IPO, review the Financial Industry Regulatory Authority (FINRA) rules on restricted persons. In short, governing bodies crack down harshly on anyone investing in companies in which they have privileged (non-public) information.

AIP Pre-IPO

Under a traditional IPO process, underwriters purchase shares of the companies they’re taking public and distribute them to high-net-worth investors such as mutual funds. Usually, this boxes out regular retail investors. However, companies like ClickIPO democratize this rarefied process by distributing shares of select enterprises to its members. Those interested in building their IPO acumen should open an account with ClickIPO.

A High-Powered Wager

Providing the groundwork for multiple innovations that are now entering feasibility, Arteris offers a compelling case for speculators seeking a high-powered public market debut. At the same time, participants will need to balance the risks associated with AIP stock, particularly the overheated IPO market.

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About Joshua Enomoto

His distinct writing style of distilling convoluted data into relatable and compelling narratives has earned him recognition among several investment-related publications.