Brainchip (ASX:BRN) share price tumbles 5% today. Why?

The Brainchip (ASX: BRN) share price has dropped today. Let's turn to the company's latest report for answers.

Gretchen Kennedy

Gretchen grew up in a small Connecticut town where she learned to read The Wall Street Journal as part of the grade six enrichment program. She moved to Australia in 2002, earned a Master of Arts (Professional Writing) and went on to spend eight years writing on Wall Street. In June 2018, Gretchen returned to Australia and has since developed a keen interest in all things ASX. In December 2020, she started writing for the Motley Fool. Gretchen's usually writing something, reading a book or chasing her dogs around.

Published March 3, 2021 5:20 pm AEDT

The Brainchip Holdings Ltd (ASX: BRN) share price has taken a hit today. While the S&P/ASX 200 Index (ASX: XJO) managed to inch up 0.80%, the Brainchip share price was down 4.95%, trading at 48 cents at the market close.

With no new announcements out today, let's recap the artificial intelligence (AI) developer's annual report released on Friday.

An unhappy customer looks at his mobile phone, indicating trouble for an ASX company — Image source: Getty Images

Brainchip FY20 wrap

Brainchip reported a net loss after income tax of US$26.8 million for the year ended 31 December 2020. This compares to a loss of US$11.3 million in the previous year.

The company pumped up its research & development (R&D) spending by 14% to reach $5.2 million during FY20.

It also jacked up its selling & marketing (S&M) expenditure to $1.4 million, a 34% increase compared to FY19.

At the end of the FY20 period, Brainchip held consolidated net assets valued at $17.7 million, a jump from the $9.1 million held at the end of FY19.

Strong start, then a slide

The Brainchip share price got off to a strong start in January 2021 and is up 11.6% year to date. However, it has fallen 7.3% over the past month.

The company lists a number of risk factors in its FY20 report. A few examples include the risk of delays in new product development, intellectual property infringements, and risks associated with information technology breaches.

Other risks were in recruiting and retaining the right people, competition and lack of the company's products being adopted.

Despite the challenges, Brainchip believes it finished off FY21, having made "significant strides in the development of our technology and commercialisation of Akida…"

Akida is the artificial intelligence (AI) company's primary hardware product. Brainchip said its purpose was "to provide a complete ultra-low power and fast AI Edge Network for vision, audio, olfactory and smart transducer applications".

Snapshot of the Brainchip share price

The Brainchip share price has gained 860% over the past year.

The company has a market capitalisation of $823 million, and there are presently 1.6 billion shares outstanding.

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