Why the BrainChip (ASX:BRN) share price is rocketing 21% to a new record high

BrainChip is booming again…

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Key Points

  • BrainChip has submitted a capital call notice to LDA Capital
  • It expects to bring in $20 million of funds from the agreement
  • Funds will be used to support its commercialisation strategy

The BrainChip Holdings Ltd (ASX: BRN) share price is rocketing higher again on Friday.

In morning trade, the artificial intelligence technology company’s shares jumped 21% to a record high of $1.69.

This latest gain means the BrainChip share price is up 141% in the space of a month.

Why is the BrainChip share price shoot higher again today?

The catalyst for the rise in the BrainChip share price on Friday appears to have been a capital call notice.

According to the release, the company has submitted a capital call notice to LDA Capital to subscribe for up to 15,000,000 shares.

This will provide BrainChip with funds to support it through its commercialisation phase.

What is the capital call?

BrainChip and LDA Capital have had a $65 million put option agreement in place for a couple of years.

This agreement allows BrainChip to issue LDA Capital with new shares when it requires funding at ~90% of the volume weighted average price during a particular pricing period. Essentially it is the company’s own private capital raising.

Today’s release reveals that the company expects to bring in $20.3 million from the capital call. This includes $5.3 million that was deferred in 2021.

Why is BrainChip doing this?

Management has explained that the agreement with LDA is to finance the Akida commercialisation strategy and to support the development of successive generations of its technology.

The company’s CEO, Sean Hehir, commented: “The proceeds raised from the capital call will be used to expand our go-to-market capabilities as we move the company aggressively into the commercialization phase. The company will also accelerate our continuous innovation of the groundbreaking Akida technology to ensure we remain the industry leaders in Edge AI.”

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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