In today's AFRNobody has a clue what Brainchip's worthTom...

In today's AFR

Nobody has a clue what Brainchip's worth

Tom RichardsonMarkets reporter and commentator

Oct 1, 2020 – 10.00pm

Brainchip – the latest member of theS&P/ASX All Tech Index and poster-boy favourite of less sophisticatedRobinhood-style retail investors – is employing some unconventional ways toraise cash.

The company, many of whose shareholders do theirresearch on Facebook, boasts it has developed a computer chip that can processdata like a human brain in an artificially intelligent way. Consequently, ittopped $1.4 billion on September 9. This despite earning just $US12,000($16,360) in revenue in 2020, with cash on hand a paltry US$5.3 million as of June30.

Ordinarily a cash-strapped $1 billion tech companysuch as this might be expected to take advantage of a rocketing share price toraise capital to shore up the balance sheet, given the requirement to investahead.

Instead, Brainchip's US institutional investorshave regularly been cashing in cheap options to help the company raise somecash. On September 30 it issued another 15 million shares at 15¢ each tounnamed institutional investors.

Could it be the company is struggling to raisemoney at prices above 15¢, despite wild retail investor enthusiasm sending thestock as high as 97¢ on September 9? Even at 15¢ it's arguably overvalued on a$239 million valuation. On Tuesday, shares closed at 36¢ – comfortably doublethat.