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Why the 4DS Memory Ltd (ASX:4DS) share price has been crushed today

One of the worst performers on the local market on Thursday has been the 4DS Memory Ltd (ASX: 4DS) share price.

In early trade the memory storage developer’s shares have plunged 43% lower to 6.6 cents.

Why are 4DS Memory’s shares being crushed today?

This morning 4DS Memory provided an update on its collaboration with imec, a research and innovation hub in nanoelectronics and digital technologies.

For those that are unaware, the two parties are working together to develop a production-compatible process for the 4DS Interface Switching ReRAM technology for next generation gigabyte storage in mobile and cloud.

According to today’s release, the two parties have identified some process modifications required to enhance the development of the second 300mm wafer lot. Management has advised that the planning and development strategy for this wafer lot will begin in the coming weeks and these wafers will be available for analysis in Q1 2019.

Chief executive officer and managing director, Dr Guido Arnout, stated that: “In the Company’s transition to production equipment, identical to that utilised by high volume memory manufacturers, imec and 4DS have learnt to rapidly identify necessary modifications in order to de-risk the latter development cycles which we plan to undertake. A major benefit of this early identification is that we can accelerate the whole collaboration process.”

While those comments put a positive spin on things, clearly shareholders are disappointed with this development and have hit the sell button in a hurry today. They may be concerned that this is a sign that it won’t ultimately be able to demonstrate a production compatible process for its ReRAM technology.

Should you buy the dip?

While this technology could be extremely lucrative if it were to be successfully developed, I would suggest investors sit back and wait to see if that happens.

In many ways, 4DS Memory reminds me a lot of digital speaker developer Audio Pixels Holdings Ltd (ASX: AKP). Audio Pixels has been promising some ground-breaking technology for many years and has failed to deliver anything other than an increasing number of shares outstanding that dilutes existing shareholders.

Instead of those two companies, I would suggest investors look at proven tech shares such as Citadel Group Ltd (ASX: CGL) or Bravura Solutions Ltd (ASX: BVS).

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Bravura Solutions Ltd and Citadel Group Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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