BrainChip share price sinks to multi-year low. What now?

Just how low can BrainChip shares go?

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Key points

  • Brainchip shares have been terrible performers on the ASX of late
  • This AI share is down around 80% from its all-time highs
  • With a quarterly report due later this month, the shares could be heading even lower

It's been a fairly lousy day for the All Ordinaries Index (ASX: XA) and most ASX shares so far this Thursday. At the time of writing, the All Ords has tanked by a meaningful 0.38%, dragging the Index to below 7,480 points. But it's been even worse for the BrainChip Holdings Ltd (ASX: BRN) share price.

This All Ords artificial intelligence (AI) share has had a shocker today. It's more of a symbolic shocker rather than a massive share price slump. But investors probably don't care to make the distinction right now anyway.

Brainchip shares opened at 38 cents each this morning. But soon after, Brainchip dropped down to 37.5 cents a share. That's a new 52-week low for this company. It's also the lowest share price Brainchip shares have traded at since December 2020:

Time for some uncomfortable statistics. So in 2023 alone, the Brainchip share price has shed a nasty 48.7% of its value. That rises to just over 58% over the past 12 months. And since the all-time high of around $1.80 a share that we saw in early 2021, investors have watched Brainchip lose a whopping near-80% of its market capitalisation.   

Ouch.

Considering this cacophony of bad news, what could be next for the Brainchip share price?

Where to next for the Brainchip share price?

Well, Brainchip seems to have the odds stacked against it. As my Fool colleague reported earlier this month, the company has featured regularly on the list of ASX's most short-sold shares. This means that there are significant sums of money out there that are being wagered on the Brainchip share price falling from its current levels.

Clearly, investors are not too excited about this company's prospects. And it's not hard to see where they might be coming from.

Back in February, Brainchip reported that its second-half revenues for 2022 came in at just US$250,000, down from US$4.8 million for the first half of the year. As my Fool colleague James pointed out, that's less revenue than many cafes pull in.

But even on today's pricing, this company still commands a market capitalisation of $680.3 million. So this could be what the short sellers are eyeing off in betting that the Brainchip share price has further to fall.

Could they be right?

Well, only time will tell. But Brainchip is due to report its quarterly finances at the end of this month. Depending on what the company has to say, this could well be the catalyst for a recovery or a further fall.

If revenues bounce back strongly, then the Brainchip share price could bounce off of these new multi-year lows that we are currently seeing – especially if the bounce is powerful enough to induce a short squeeze. But things could get even uglier if investors aren't impressed with what the company has to say. 

Let's fetch the popcorn while we wait and see what happens.

 

Motley Fool contributor Sebastian Bowen 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 Scott Phillips.

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