Wow. Its worth reading. Long article. From half way down it is all about BRN
“Inception” — Tiny Stock teased as “Next NVIDIA” by Tim Bohen?
What's the AI/Autonomous Driving company being touted by StocksToTrade?
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Here’s the intro to a recent pitch fromTim Bohen:
Bohen has been working with penny stock traderTim Sykesfor years now atStocksToTrade, and this ad is selling access to theStocksToTrade Advisory($49/yr), which seems to offer some trading suggestions based on the algorithms and trading software that they sell as the StocksToTrade system (which is more like $2,000/yr, so odds are pretty good that this is the “entry level” pitch, and that Advisory subscribers get the hard sell on the full StocksToTrade platform later).
But what we’re interested in, of course, is what “next NVIDIA” stock they’re pitching. This ad has actually been rolling for several months now (the oldest copy I can find in our archive is from late August), but I just got asked about it again today, and I’ve not written about it before, so we’ll dig in and see what this secret “Inception” stock might be. Let’s just jump right into the tease and get started…
The big picture spiel is all about AI in general, as you might imagine… but when he drills down into some detail, most of the pitch is really about autonomous driving — which hasn’t been the focus of AI pitches much this year, thanks to the new AI models and products that have captured all our attention, likeChatGPT… but was arguably the primary driver of interest in AI a few years ago.
(And as coincidence would have it, “autonomous cars” was the driving theme behind thefirst pitch we ever saw for NVIDIA — that was fromDavid Gardnerat theMotley Foolback in May of 2014… and yes, NVDA is up more than 10,000% since then, so of course I wish I had bought it back then instead of several years later. Right now I think that’s still the second-best teaser pick in Stock Gumshoe history, behind only David’s brother,Tom Gardner, and his pick of Netflix in 2007, currently showing a gain of about 18,000%. No, I didn’t buy that one, either.)
Other clues about this “next NVIDIA” story?
And for some reason he compares this to LiDAR, which seems like a bit of a straw man here…
I can’t say I’m an engineering expert, but most of that sounds awfully nonsensical to me. LiDAR sensors are now getting very small, and presumably they’re getting more efficient. They no longer require a massive $1,000 tripod on the roof of the car, and one assumes that they no longer cause a 10%+ drag on EV range in very “feature rich” areas like cities where the scanner is extremely active.
But more importantly, of course, comparing a sensor to a processor doesn’t make much sense. Whether you use LiDAR, or radar, or cameras, or whatever else to sense the surrounding environment, something has to do that sensing… and you need a processing unit that deals with all that sensor data, figures out what it means, and sends instructions to the engine and the brakes and the steering wheel and whatever else. You can’t do it without “eyes,” but you also can’t do it withjusteyes. Here’s how he continues with that strange straw man argument…
And the hype gets pretty strong with this one…
That’s an odd statement, saying that a LiDAR sensor will never be as powerful as an AI supercomputer. It’s like saying that your eyes will never be able to do the same thing your brain does. You need both, you need sensors that can take in and process and digitize the current environment… and you need a “brain” that can make decisions based on changes in that environment.
And there are, of course, plenty of autonomous cars on the road right now. There have been some challenges, and nobody has really figured out how to make any money from this progress so far, but there are lots of different chips and systems and different sensor configurations being used by robo taxis in a few cities… and plenty of less-advanced “driver assistance” systems that don’t really count as autonomous driving. Some of those use NVIDIA’s chips, some use other designs, but there are several platforms which are making it work, even if it’s not ready for mass commercialization yet.
More from the ad:
This is the same argument that Elon Musk and NVIDIA and many investors have been making about autonomous vehicles for a decade now — that they’ll save us from needing to own cars, will reduce accidents, and will make the world far more efficient, getting rid of all those capital-intensive automobiles that spend most of their time parked.Whitney Tilsonwas full-throated in his bold predictions about “Transportation as a Service” (TaaS) a few years ago, and many others have pitched similar ideas — the self-driving car technology companies who build the machines or develop the software, the sensor companies who make the LiDAR and other systems that allow cars to map the world, the chipmakers who are capitalizing on the coming ability for autonomous cars to talk to each other, making traffic a thing of the past, and the companies who might benefit form autonomous cars and the fact that we no longer need drivers, whether that’s DoorDash or Uber or whoever else. Get-rich daydreams are everywhere… and who knows, maybe some of them will even come true.
Not so much yet, though, and most of the LiDAR and “autonomous driving” stocks have had a tough couple years as we wait for a real “mass market” or opportunity for profit to emerge int his area.
So which stock is Bohen revved up about? He says they’ve partnered with an $80 billion automaker to build something impressive…
And some other hints about folks who are using “Inception” ….
And some other clues about our “Inception” stock…
And some hinting about the CEO…
Compaq and HP merged more than 20 years ago, so I guess we’re at least dealing with someone who’s a grown-up. And we’re told that the stock has already soared…
Here’s a screenshot of the chart he shows in the ad, which, if you look closely, will also call attention to the fact that the $2 share price was back in theSpring of 2022… more than 15 months before the earliest version of this ad that I can find. Is this just a retread idea? All I know is that we’ve been getting the ad pretty incessantly for a couple months now, including this week, so apparently it’s still a big focus of Tim Bohen. Or, at least, it’s still bringing in new subscribers.
Here’s a screenshot of the chart he shows in the ad, which, if you look closely, will also call attention to the fact that the $2 share price was back in theSpring of 2022… more than 15 months before the earliest version of this ad that I can find. Is this just a retread idea? All I know is that we’ve been getting the ad pretty incessantly for a couple months now, including this week, so apparently it’s still a big focus of Tim Bohen. Or, at least, it’s still bringing in new subscribers.
so… a tiny stock that had a 500% revenue increase and a huge surge in the stock price (988% growth in two years) is the best idea for “Inception” and the brain behind self-driving cars, you say? Who might that be?
Well, the good news, assuming you don’t own the stock, is that the share price is alotlower than $2 now. This is a little Australian company called Brainchip (BRN.AX in Sidney, BRCHF OTC in the US), and here’s my version of the stock chart from those two years, from early 2020 through to early 2022… it’s a clear match, though since this was often a wildly-trading penny stock in 2020 and 2021, you can see that Bohen’s chart must be smoothed out a bit, maybe it’s just a weekly or monthly chart.
And the full picture, up through today, as Tim Bohen keeps pitching this as the “Inception” chipmaker and the key to self-driving cars? Here’s what the five-year chart looks like:
We’ve actually looked a BrainChip a few times over the years, though I thinkI’ve only written one article about it — that was back in 2017, covering a teaser ad for an Australian investment newsletter. BrainChip was really a startup back then, though a well-funded one, and was just shipping its first test equipment (they were calling them “accelerator boards” at the time) to automakers to try to get some customers in the autonomous vehicle business… though they were being pitched because of the potential use of their new Akida processors in blockchain projects, because, well, everything was about blockchain in 2017.
Now, no surprise, everything is about AI, so it’s an “AI” company. Here’s how they describe themselves:
And yes, they did bring in a new CEO, Sean Hehir, and he did come from HP, Compaq and Fusion-io… thoughthat was a little over two years ago, when their stock was still soaring. Here’s what Hehir said when he was hired:
The challenge, at least for investors, is that on the financial side BrainChip still looks like an R&D company, without any meaningful revenue. They have had some R&D income, presumably from funded pilot projects over the years, but it has never reached the level of covering even 20% of their operating expenses (and that was in their best year, 2022, when they had some kind of $5 million revenue bump that hasn’t been repeated, which is also what created that one-time 500%+ surge in revenue that Bohen hints at — most years, the revenue covers less than 1% of expenses).
They do still have $20 million or so in cash on the books, mostly because they’ve steadily sold more shares in most years — the good news is that their largest share sale was back in 2022, so they at least got an elevated price for that dilution, but the share count has gone up by 60% in five years. And it’s about to go up again, with a big share sale at a MUCH lower price (more on that in a minute).
Is this going to turn into a commercial enterprise sometime soon? Will the need for customizable edge AI chips drive some more partnerships that move into real products, and some actual volume production of their Akida chips? I have no idea. They say lots of positive things, buttheir Investor Presentation has no financial information in it, it’s all about their product development and their early adopter customers, including Mercedes (that teased “$80 billion partner”), who are apparently still working with them but not spending much money on that work. Yet, at least.
It sounds like a cool idea. There are a lot of silicon-based AI products trying to build and take advantage of this current level of AI enthusiasm, including a few companies who sound somewhat similar to BrainChip in trying to build smaller, much more efficient AI processors that can handle specific tasks, rather than the big generalist AI chips, like NVIDIA’s GPUs, which can handle almost any task but are overkill for some specific processing needs and have to be housed in hugedata centersrather than at the Edge, or in a specific product (like a car). I don’t know enough to know what kind of tasks BrainChip’s Akida designs are best for in this idea of “distributed AI,” whether that’s inference or training or some very specific AI task that could be done by a custom-built chip, but the idea seems to be having AI processing closer that’s done closer to the real-world action, and much more efficient.
It’s a little similar to the evolution of Bitcoin hardware, frankly — originally Bitcoin was mined with regular ol’ CPUs, then some people realized that GPU’s like NVIDIA’s would be far faster if the mining was programmed to use them properly, and those took over… and then Bitcoin got big enough, and established enough, that people could justify spending a big chunk of money on developing customized ASICs (application-specific integrated circuits) that would handle just one task, Bitcoin mining, much more efficiently than a high-end and expensive GPU chipset, and a few companies started making those chips and building that hardware, and before you know it almost all Bitcoin mining was done with ASIC miners from Bitmain, Canaan and others, and ASICs were being designed for other popularcryptocurrencies, too… though GPUs still get a lot of use for the thousands of tinier cryptos that don’t yet justify the development of specific hardware.
Maybe we’ll see the same thing happen with AI… that’s certainly the bet of a lot of people, including the folks behindEtched.aiand many others. And maybe that rising interest in a broader variety of AI hardware will help out BrainChip, too. I do not have the market expertise to place a bet on which startup chip hopeful might take the world by storm as AI moves out of this dominance by NVIDIA, or whether there’s a place for BrainChip’s Akida project. All I know is that it’s not there, yet, and they’re now facing a wild storm of funding going into hundreds of other application-specific or otherwise customized AI silicon projects, so the competition should be wild. Whether BrainChip has an advantage because they’ve been working on this for six or seven years, or a disadvantage because they didn’t design for what the AI customers are lusting for right this second, I have no idea… all I know is that semiconductor changes in big industrial projects like cars and machinery often come very slowly, and they’re not booking sales now… so if there’s good news to come, it’s not here yet, and it looks like investors have largely moved on to the next shiny object. For now, at least.
As of today, BrainChip is valued at about $200 million… so it’s very small, but not minuscule. As of the June semiannual report they had about $22 million in cash, which meant that they sold enough stock ($9 million) in those six months to almost cover the cash they consumed (about $10.5 million). They have a funding agreement with a firm called LDA Capital, and theyexercised their option on that again this month to notify the market that they’re selling up to 25 million more shares— LDA capital gets a 8.5% discount to the share price, so that money will be somewhat dilutive, but not dramatically so. They say they have about A$16 million in capacity still available from LDA, under their funding agreement, so that and their current cash balance are probably enough to get them through 2024, at least at their current cash burn rate.
Will the cash burn continue? I don’t know. We see this with early-stage biotechs pretty regularly, and it’s often very hard to break that cycle once you start selling millions of shares at lower and lower share prices. They say they’re trying to “aggressively expand our go-to-market capabilities” and are “embarking on numerous initiatives to accelerate market adoption of our groundbreaking Akida technology.” So they’ve still got ambition and plans, just no real numbers for me to work with.
Given my lack of expertise about their deals and their technology, I’ll leave it there — personally, I’m much more likely to wait until there’s something I can sink my teeth into — some proof of commercial viability with their product, in the form of real orders from their partner companies at least, if not actual revenue.
But it’s also true that you’ve gotta start somewhere. Investing in these kinds of R&D projects that are early in partnering and not yet commercial is really more like venture capital investing than stock investing, this is inherently a binary bet on the future — either the product will gain acceptance, or not — and if you’re not going to be patient in the usually very slow process of trying to build a commercial market for a new kind of chip, there’s not much point in getting involved at all.
Unless you’re a penny stock trader, of course, and want to try to ride the wild moves that tiny little stocks can sometimes make when they get a little attention. Maybe that’s what Tim Bohen is doing here, I have no idea, otherwise I’m not sure why anyone would put out such a vociferous pitch for a penny stock, using year+ old numbers.
So I’ll turn it back to you, dear friends — want another early-stage speculation in the AI world, with a different kind of chip designer? Think BrainChip has what it takes to really become a commercial business and succeed as a “next NVIDIA” idea? Am I being too cruel or too kind? Let us know with a comment below.
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