Chip designer Arm’s (NASDAQ:ARM) shares rose sharply in the wake of the initial public offering (IPO) of ARM stock, which occurred last week. But now Arm’s shares fell below their IPO price during yesterday’s action.

Reuters is reporting that many short sellers are piling up wagers against Arm.

More Information About ARM Stock

Arm’s IPO price was $51, while the shares closed yesterday dropped as low as $49.85 before closing at $52.16.

Roughly 14 million shares of ARM stock are being borrowed, indicating that investors are shorting those shares. The 14 million shares represent about 8% “of the stock’s free float,” Reuters reported, citing research firm Ortex.

Analysts Are Unimpressed With Arm

Multiple analysts recently expressed skepticism about Arm’s outlook. Bernstein’s Sara Russo began covering ARM stock with an “underperform” rating and a $46 price target on the shares.

She believes that the firm may have difficulty benefiting from artificial intelligence (AI) because it has traditionally developed designs for smartphone chips. Further, Russo is skeptical about the company’s belief that it can meaningfully increase the amount of royalties that it obtains from smartphone makers “over the next 3-4 years.”

Also lukewarm was Needham’s Charles Shi, who assigned the name a “hold” rating after starting coverage of it. Shi thinks that Arm will be hurt by less emphasis on smartphones by other companies going forward.

Finally, Susquehanna’s Mehdi Hosseini and Chris Rolland started coverage of ARM stock with a “neutral” rating and a $48 price target, calling the shares “fairly valued.” Moreover, these two analysts think that the company has little room to raise its royalty rates and believe that the growth of its end markets is slowing.

On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.