Minnow to unicorn': BrainChip tops $1.4b valuation Tom RichardsonMarkets reporter and commentator
Sep 9, 2020 – 4.41pm
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BrainChip reports it has developed a computer chip that copies the functions of the human brain to process information or data in an artificially intelligent way.
Louis DiNardo, the Brainchip CEO, says the company is targeting commercialisation of its neural network processor by 2021. Rick Stevens
"I don't think anybody, no one, expected we'd have the kind of [share price] appreciation that we've enjoyed over the last two or three weeks," its CEO Louis DiNardo said from San Francisco. "I think there's a lot of very happy shareholders out there.
"The last two or three weeks have just been phenomenal. We've gone from the mid 20s – when it hit 40 I said what's going on, when it hit 50 I started scratching my head, now we're sitting well over 80 and into the 90s."
Since September 2 it has added around $936 million in value, going from 31¢ to 91¢, after announcing an agreement to offer space-industry player Vorago Technologies early access to its brain-chip named Akida.
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Over the past year shares are up 2933 per cent.
After listing in 2015, BrainChip earned just $US13,397 in revenue from customers in financial 2020 and $US66,635 in financial 2019. For financial 2020 it posted a loss of $US6.86 million, with shares on issue growing to 1.56 billion by August 8, on top of 221.2 million unquoted securities.
Institutional shareholders include Regal Funds Management, Thorney Technologies and Metals X Ltd.
"It would not be a surprise to see BrainChip come on to the radar of the major players in the global chip industry."
— Alex Waislitz, Thorney
"Thorney has followed BrainChip for some time and we invested when the market cap was well below $100 million," Alex Waislitz, the founder of Thorney Investments, said. "The recent spectacular share price gains have seen it now become one of the largest holdings by value in our Thorney Technologies LIC."
According to Bloomberg data, beneficial interests in Western Australian tin miner Metals X still account for 3.7 per cent of BrainChip's share register. This is after BrainChip executed a backdoor listing out of Aziana, of which Metals X was the major shareholder. The miner underwrote $3.5 million of a $4 million capital raising to fund the BrainChip acquisition.
Metals X is still BrainChip's fourth-largest shareholder behind the company's founder Peter Van Der Made, Robert Mitro, and Regal.
Stock-tipping forums for less-sophisticated retail investors such as HotCopper and Facebook's ASX Stock Tip Group also readily discuss the business.
Mr DiNardo acknowledged WA investors remained on the register as a result of the backdoor listing, but did not think Perth-based HotCopper or its investor relations partner Advisir, which typically offers to invest between $50,000 to $200,000 in capital raisings in exchange for marketing services, were shareholders.
The company is also due to join the S&P/ASX Technology Index on September 21 in a move Mr DiNardo suggested has brought the company to the attention of more institutional investors.
Road ahead
This year BrainChip has announced research partnerships with Ford Motor Company, Magik Eye, Valeo and Vorago, which Mr DiNardo said helped explain its rising popularity with retail investors.
After four of five years of development the CEO said BrainChip was ready to commercially manufacture its chip on behalf of customers in heavy industries such as automobiles, surveillance, or space.
Mr DiNardo stated investors could expect "significant" revenue in 2021, although declined to guide to any approximate dollar values.
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"Significant depends on your viewpoint, but certainly by the second half of the year it should be significant and we'll be kind of weaning ourselves into it early in the year," he said.
On August 13, BrainChip entered into an agreement with private US funder LDA Capital to draw up to another $29 million in funding in exchange for issuing LDA 75 million unlisted options, with 37.5 million exercisable at 15¢ and 37.5 million exercisable at 20¢ to expire August 13, 2023. The deal includes a minimum $10 million drawdown commitment within the first 12 months.
As at June 30, BrainChip had just US$5.3 million cash on hand.
Billionaire investor and significant shareholder Mr Waislitz suggested BrainChip, if successful, could become a takeover target for giant semi-conductor players such as Intel, Nvidia and Micron.
"BrainChip’s market capitalisation has gone from minnow to unicorn status in rapid time, so there are now huge expectations in front of it," he said.
"The onus is now very much on the company to deliver substantial revenue from the deals it has announced. If it can live up to this promise, it would not be a surprise to see BrainChip come on to the radar of the major players in the global chip industry. We are watching it closely."
BRN Price at posting:
75.0¢ Sentiment: Hold Disclosure: Held
(20min delay)