DON7SPY
Industrial Engineer, MBA Finance, Data/Supply-Chain Background, Options Analysis
Arm remains wildly overvalued even after falling 175 points from its top, still trading at 336x earnings, 236x forward earnings and 61.5x sales. Eventually the bids will stop, there will be no bailout rally and chasers will be forced to learn the fundamentals. The price target remains $100-120, reached slowly and then all of a sudden. x.comÂ
Arm remains badly overvalued: shorting a $400-500 billion company at around 90-100x sales almost always pays, as Palantir shows. Arm still trades at 490x earnings and 332x forward earnings, and has already fallen about 100 points in three to four sessions, as expected. The target is $125-150 within 12-18 months. x.com x.comÂ
Arm Holdings is expensive against its earnings, trading at 92x forward earnings versus a typical 38x for chipmakers. At 38x next year's $3.05 EPS, fair value runs roughly $102-$130, so at $281.30 buyers pay about 116% over fair value. This is a levels-only view from reported earnings and revenue estimates, with no fundamental work. x.comÂ
Arm Holdings looks expensive heading into Wednesday's earnings, trading at a significant premium with a forward P/E of 103x, and it may end up below $175. x.comÂ
Arm's low blended royalties leave pricing and mix leverage that makes earnings look massively understated at 110x forward P/E. It collects about 7 cents per chip overall, versus $1 on compute and networking chips and $0.85-$0.90 on smartphones. An 8-cent bump to 15 cents per chip is a hypothetical $5-6 billion royalty-revenue scenario, which would be pure cash. Mix shift and price increases are coming, though royalties may not double. x.com x.comÂ
Arm Holdings looks unattractive because its nearly 300 P/E ratio is difficult to justify against only 22% year-over-year revenue growth. x.comÂ
Arm's downtrend continues, with whale accumulation gradually decreasing. Momentum bars at $207, $213 and $236 act as support, while resistance sits at $250-255. x.comÂ
Arm remains a long-term winner over the next 10 years, but not a short-term buy after running too far, too fast. Its performance has to catch up with at least part of the move, so buying at these levels carries elevated risk if a negative surprise hits. x.comÂ
Arm is not worth buying more at about 150x forward earnings. The bottleneck it addresses and its pricing power are real, but it is still unproven whether Arm can capture enough of the profit to justify that multiple. x.comÂ
Arm is still expensive at about 40x revenue with only 20% growth, so it has not fallen enough. x.comÂ
SoftBank owns about 90% of Arm, leaving a locked-up float that looks almost certain to be pushed far higher in the early innings of a GPU mania. The bet is not on Arm's technology but on others squeezing that tight float. x.com x.comÂ
Arm's post-earnings rise makes little sense at over 40x sales, because the results did not justify it. Remaining performance obligations fell and consensus numbers saw only very modest adjustments, yet the shares rose after successive double-digit moves. x.comÂ
