Exclusive: SoftBank's Masayoshi Son and Arm CEO on the Biggest IPO of 2023 9/14/23

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Carl Quintanilla (0:31)

Market Moving Insight and Analysis join Jim Cramer, David Faber and me, Carl Quintanilla on the opening bell hour of CNBC Squawk on the Street.

Good Thursday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Jim Cramer, who's back, David Faber at Post 9 of the New York Stock Exchange. What a morning we have on tap. The RMIPO, China cuts reserve requirements, ECB hikes, UAW strike deadline, and the ECO data runs hot from retail sales to PPI. We got oil above 90 for the first time this year. We're going to begin though with this year's biggest IPO, Arm pricing its offer at 51 That's the high end of the projected range and valuing the SoftBank owned chip designer at $54.5 billion, fully diluted. Arm whose customers include Apple and Nvidia looking to ride this AI wave listing on the Nasdaq today under ARM.

And David has this exclusive with Rene Haas and Masa Son in just a few moments, right, David?

David Faber (1:24)

Yeah. You know, listen, pricing, as you say, 51 My understanding is that they could have gone 52 That's what I've been told by any number of people.

But Masa said, let's do 51 with the prospect, Jim, that that at least will position it better for some sort of positive open. And that's important here given the importance of Arm to the overall IPO market, given the size of this offering, the focus on it, and the fact that we are expecting more to follow. If it doesn't perform well, that might leave not particularly good taste, so to speak, in investors' mouths. I'm hearing the hedge funds have been pared back, long only, sovereign funds have stepped up and converted from what was interest to actual buying power. So we'll see how it performs, Jim. On the fundamentals, listen, it's highly valued.

At least based on when you look at the last 12 months, obviously it's about the future and that's what they've been focused on.

Jim Cramer (2:16)

It's interesting you talk about the long only and obviously these anchor tenants. The anchor tenants themselves are not going to be held to, I paid too high for something, I paid 100 times versus say Cadence and Synopsys, which are my comps.

And you need that because remember, if you get a 51, you got to be able to sell it at 58 I mean, there's got to be some upside. And David, even at 51, it's expensive.

David Faber (2:40)

Yeah, it's not cheap, but it may very well be the way trades today is much more about supply demand than it is about underlying fundamentals, which will sort out over time.

Jim Cramer (2:50)

Well, when you speak to Rene, Rene, I don't think is, I think Rene wants a good deal, Rene Haas, CEO. He does not want a high valuation. He wants people to be rewarded. And I think one of the problems, David, is that the very small float might pop big. We don't want that.

David Faber (3:10)

No, that.

You know, you want to sort of leave everybody feeling good, right? Leave something on the table.

Jim Cramer (3:14)

I just said that. There's got to be some happy medium called the bad deals are the ones that open up huge. And then retail people get picked off. They use market orders.

Carl Quintanilla (3:24)

What are the key examples that you think of when you look at that scenario?

Jim Cramer (3:28)

Well, I mean, we didn't know what first is Facebook, which who the heck knew what that was going to be. But we had Uber where you had people who really wanted out that we didn't know. And we had individuals who wanted in and it left a bad taste with everybody.

You want to grab that?

David Faber (3:45)

Yeah, I'm going to grab that. What's that?

Carl Quintanilla (3:47)

David mentioned the underlying fundamentals. The other story is the migration from smartphones to data center and then royalty rates.

Jim Cramer (3:55)

Royalties are tough because they tend to go down. I was struggling with whether Qualcomm should be the comp and that's very low value because there's so much that's cell phone, David, you know this thing really has to have a lot of Nvidia like business in order to be able to get the higher valuation.