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Brainchip (ASX:BRN) share price slides on bigger loss

exploding asx share price represented by cloud coming out of man's brain
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Brainchip Holdings Ltd (ASX: BRN) shares are sliding today after the company released its results for the FY21 half-year. In early trade, the Brainchip share price plunged by 5.66% to 50 cents before partially recovering to 51 cents at the time of writing. 

Let’s take a look at how the artificial intelligence (AI) developer has been performing.

What’s impacting the Brainchip share price?

The Brainchip share price is under pressure today after the highly-traded company posted a loss of $26.8 million – up an astounding 137% on the loss recorded in the prior corresponding period (pcp). While operating income was up on the pcp (from $75,500 to $121,000), expenses skyrocketed resulting in a 4,005% increase in non-cash losses.

Most of these new expenses can be attributed to the financing agreement Brainchip signed with LDA Capital.

In further news impacting the Brainchip share price, earnings per share (EPS) came in at a 1.76 cent loss, compared to a 0.95 cent loss in the pcp.

No dividend was paid for the FY21 half-year.

What’s happening to ASX tech shares in general?

ASX tech shares have taken a hammering this week, as bond yields increase. Some investors worry that tech companies may be over-leveraged and unable to pay back their debts at higher interest rates.

Some of the biggest losers today include Afterpay Ltd (ASX: APT), Kogan.com Ltd (ASX: KGN), and Nuix Ltd (ASX: NXL).

Words from the chair

Commenting on the company’s results, Brainchip chair Emmanuel Hernandez said:

Throughout the financial year of 2020 BrainChip demonstrated great success in advancing AI at the Edge and the commercialization (sic) of the Akida device and intellectual property…

In August 2020 we entered into an equity financing arrangement with LDA Capital… We are pleased with the success of the funding arrangement which has placed us in a strong cash position.

What does Brainchip do?

Brainchip is involved in the development of software and hardware-accelerated solutions for advanced AI and machine learning applications. The company maintains a primary focus on the development of its processor unit hardware product, Akida.

According to Brainchip, Akida is both scalable and flexible to address the requirements of edge devices. An edge device is any piece of hardware that controls data flow at the boundary between two networks, such as a router or a smartphone. Akida is designed to provide ultra-low power and fast AI edge network for vision, audio, olfactory and smart transducer applications. The edge AI market is forecast to exceed US$50 billion by 2025 and is the central focus of the company.

Brainchip has revenue channels in Australia, North America, Europe, the Middle East, and Asia.

Brainchip share price snapshot

While the Brainchip share price is trading lower today, it is still worth ten times what it was this time last year. Back then, Brainchip shares were selling at just half a cent each.

However, the company’s shares have fallen significantly from their September 2020 high of 76 cents.

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Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Nuix Pty Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Kogan.com ltd and Nuix Pty Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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