Why did the BrainChip share price crash 16% today?

Investors are staring at yet another new 52-week low with Brainchip shares today.

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Key points

  • The BrainChip share price has hit another new 52-week low today
  • Brainchip shares crashed more than 16% this morning after the company revealed quarterly inflows of just US$40,000
  • The company has now lost almost half of its value in 2023 alone

It's been a fairly positive day for ASX shares and the share market so far this Friday. At present, the All Ordinaries Index (ASX: XAO) has risen by a healthy 0.39%, pulling it back over 7,500 points. But it's a very different story when it comes to All Ords tech share BrainChip Holdings Ltd (ASX: BRN).

The BrainChip share price is having a shocker today. The company closed at 42 cents a share yesterday but opened at 38 cents this morning before falling as low as 35 cents a share (down 16.67%). That's a new 52-week low for Brainchip. 

The shares have recovered somewhat at the time of writing, but are still trading at 38 cents each, down a nasty 8.43%.

So what on earth is going on with Brainchip today that would elicit such a dramatic slump in value?

Well, it seems the culprit is the quarterly cash flow announcement Brainchip has released to investors today.

Over the three months to 31 December 2022, Brainchip reported that it had experienced net cash outflow of US$1.9 million. But in the quarter ending 31 March 2023, this spiked to an outflow of US$6.3 million.

This wasn't helped by the fact that cash inflows from customers were US$41.1 million for the December quarter, but just US$0.04 million (read US$40,000) for the March quarter.

Brainchip ended March with a cash balance of US$17.7 million, down from US$23.1 million on 31 December.

Brainchip share price snapshot

Just yesterday, we discussed what was then a new 52-week low for Brainchip. At the time, we noted the high short-seller interest in the Brainchip share price, and what it would take for the shares to either jump higher or lower.

Investors knew this cash flow report was due this week, so it seems many were taking a bet that it would be bad news. Well, the shorts have certainly been proven right here. Brainchip shares are now down 49% in 2023, and down by around 58.5% over the past 12 months:

The company has also lost a painful 80% or so of its value since the all-time highs of close to $2 a share we saw way back in early 2022.

At the current Brainchip share price, this All Ords tech share has a market capitalisation of $742.16 million.

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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