With short sellers looking to profit from the stock, it closed at $55.17 after touching a high of $69 on Friday.
Arm shares underperformed the Philadelphia semiconductor index (.SOX), which closed down 0.96% on Tuesday as rising bond yields weighed on growth sectors such as technology.
Short sellers need to borrow a stock to short it, and the relationship between shares on loan and shorted is normally quite close, according to Ortex.
By comparison, Tesla (TSLA.O), a stock with a similar percentage of shorted shares, has a cost to borrow at 0.48%, Ortex said.
Arm's higher cost to borrow "can be an indication that the demand to borrow, and short, the stock is high," Hillerberg said.
Persons:
Dado Ruvic, Daniel Morgan, Morgan, Thomas Martin, Ortex, Peter Hillerberg, Hillerberg, Needham, Lewis Krauskopf, Sinéad Carew, Lisa Bernhard, Mark Potter, Matthew Lewis
Organizations:
REUTERS, Arm Holdings, ARM, Nvidia, GLOBALT Investments, Bernstein, underwriters, Klaviyo Inc, Thomson
Locations:
Philadelphia, Atlanta, New York