The BrainChip Holdings Ltd (ASX: BRN) share price had a month to forget in October.
During the period, the semiconductor company's shares lost a quarter of their value.
This meant that the BrainChip share price was down a whopping 72% from its January high.
Image source: Getty Images
Why did the BrainChip share price crash in October?
The majority of the weakness in the BrainChip share price came at the end of the month after the company released its quarterly update.
That update revealed arguably the lowest cash receipts seen by a $1.5 billion listed Australian company with an active sales and marketing team.
For the three months ended 30 September, BrainChip reported cash receipts of just $118,000. That's a touch over $39,000 a month, which is significantly less than some microcaps are generating.
In addition, the company continues to burn through its cash balance. BrainChip recorded an operating cash outflow of $3.8 million for the third quarter, bringing its year to date operating cash outflow to $11.8 million. This left it with a cash balance of $24.6 million.
Competition concerns
Given the abject sales performance, the market appears concerned that BrainChip's technology is either being overhyped or overlooked in favour of competing technology from larger rivals.
In respect to rival technology, global giants Nvidia and Qualcomm, among others, are targeting the same 'edge' market with their Jetson and Snapdragon products. In respect to Nvidia, the tech giant recently commented:
At GTC 2022, NVIDIA announced the Jetson Orin Nano series of system-on-modules (SOMs). They deliver up to 80X the AI performance of NVIDIA Jetson Nano and set the new standard for entry-level edge AI and robotics applications.
It is also worth noting that in FY 2022, Nvidia spent US$5.3 billion on research and development. How BrainChip could ever compete with that, is anyone's guess.
And given its huge budget, Nvidia (and also its rivals) could easily have just acquired BrainChip if they felt that its technology was truly game-changing, a threat to their businesses, and about to disrupt the market.
In light of the above, it's no wonder that BrainChip gets labeled a meme stock by many.
