Arm Holdings shares extend declines, down fourth session in a row

By Caroline Valetkevitch and Lewis Krauskopf

NEW YORK (Reuters) – Shares of Arm Holdings (NASDAQ:) fell for a fourth straight session on Wednesday after the chip designer’s stellar market debut last week, with short seller interest picking up.

The stock hit a low of $52.24, roughly 2% above the $51 initial public offering price in this year’s biggest listing last Thursday. The shares were last down 4.2% at $52.85.

Grocery delivery app Instacart went public on Tuesday and marketing automation company Klaviyo opened on Wednesday 22.5% above its IPO price.

Shares of Instacart, formally known as Maplebear, were last down 5.9% at $31.71.

In an indication of interest from short sellers in bets on Arm, 8.83 million shares of the newly listed chip designer are “on loan,” representing about 5% of the stock’s free float, data and analytics company Ortex said on Wednesday. That was up from 5.12 million shares on loan, or 2.7% of the stock’s free float, on Tuesday. Short sellers need to borrow a stock to short it, and the relationship between shares on loan and shorted is normally quite close, Ortex said.

Arm and Instacart were “pumped up to do the IPO,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia. “People bought the stock. Some people instantly turn around and sell the stock for whatever profits they can get after a day or two” as the stocks establish a base, he noted.

Arm also has a limited number of publicly traded shares, with SoftBank (TYO:) holding a roughly 90% stake. In its market debut, the stock closed at $63.59, about 25% above the IPO price.

Trading in Arm’s newly listed options were busy on Wednesday, with activity leaning toward puts. Put options convey the right to sell shares at a future date and are typically used to defend against or bet on further stock declines.

Some 26,000 contracts had changed hands by 11:30 a.m. (1530 GMT), about 15,000 of them puts. Put options that would guard against the stock slipping below $50 and $52.50 by mid-October were the two largest blocks of open contracts in Arm options, according to data from options analytics service Trade Alert.