Here we look at some of the biggest movers last week, while only considering the companies with a market cap of at least $5 billion.
Shares of the cybersecurity software business rose nearly 20% last week after it was announced that it was being acquired by Cisco Systems (CSCO:US) in a deal worth $28 billion. The all-cash acquisition will be financed through a combination of cash and debt. This acquisition represents Cisco's largest ever and further reinforces the company's focus on security software.
Splunk’s software solutions help businesses monitor and analyze their data to enhance cybersecurity and address technical issues more efficiently. On the other hand, Cisco has been strategically expanding its cybersecurity division to meet the evolving needs of its customers and to drive overall growth. Still, the stock fell about 4% on the news given the high costs needed to finalize the deal.
The Chinese EV maker fell more than 18% last week, including the largest single-day decline since September 2019. The decline occurred after Nio said that it successfully secured $1 billion through a two-tranche convertible bond offering.
The funds raised will be utilized to reduce existing debt and enhance the company's financial position. The offering consists of two bonds: a six-year put-four convertible bond and a seven-year put-five convertible bond, both of which are senior and unsecured. The shorter-term bond carries a 3.875% interest rate, while the longer-term bond has a 4.625% interest rate, as announced by Nio on the Hong Kong Stock Exchange.
"The company plans to use a portion of the net proceeds from the notes offering to repurchase a portion of the existing debt securities ... and the remainder mainly to further strengthen its balance sheet position as well as for general corporate purposes," the company said.
Shares of the American IoT firm dropped nearly 18% in the week behind us, after short-seller “Spruce Point Capital Management” announced that it was shorting the stock. In the published report, Spruce Point outlined its concerns about Samsara and suggested that the company's shares could face a long-term downside risk of up to 45% to 75%, potentially reaching a price range of $6.30 to $13.90 per share. Samsara shares closed the week at $23.13.
Accordingly, the short-seller pointed out that Samsara's business model included a significant hardware component, which sets it apart from many Software as a Service (SaaS) companies. This hardware-centric approach exposes Samsara to various risks that are not typical for SaaS companies.
Moreover, the company’s “improving profitability is a mirage,” said a short-seller, while also discussing the revenue growth in a concerning manner.
Affirm Holdings (AFRM:US)
Shares of the fintech company headquartered in San Francisco, declined more than 17% as the company’s buy-now-pay-later (BNPL) business model is heavily dependent on the interest rates environment, with the Federal Reserve signaling on Wednesday that it is prepared to hold rates higher for longer to curb inflation.
While the Fed decided to keep interest rates steady for the time being, the officials suggested that one more interest rate hike may be needed before the end of the year. Additionally, the Fed anticipates fewer rate cuts in the coming year compared to previous projections due to still-high inflation figures. They have also revised their economic growth expectations for this year, with gross domestic product (GDP) now expected to rise by 2.1%.
“We want to see convincing evidence really that we have reached the appropriate level, and we’re seeing progress and we welcome that. But, you know, we need to see more progress before we’ll be willing to reach that conclusion,” Chair Powell said.
Rep. Goldman bought some AFRM shares in April this year.
Arm Holdings (ARM:US)
The British semiconductor giant’s shares closed the week around 15% lower despite the chip company making a much-anticipated trading debut on September 14. The IPO priced shares at $51 each and the company was valued at nearly $60 billion at the opening.
Arm sold approximately 95.5 million shares, with SoftBank retaining control of about 90% of outstanding shares. On the first day of trading, Arm's stock opened at $56.10 on September 14 and closed at $63.59. Still, the company’s stock fell 15.5% last week, ending the week at $51.32, roughly matching the IPO price.
Analysts pointed to a swollen valuation. At a valuation of $60 billion, Arm would have a price-to-earnings (P/E) multiple of over 110 based on its most recent fiscal year profit. This P/E multiple is similar to Nvidia's (NVDA:US) valuation, which also trades at 108 times earnings. However, it's important to note that Nvidia has a growth forecast of 170% for the current quarter.