'Nobody is happy': Why the BrainChip share price is diving 16% on Tuesday

It hasn't been a good day for Brainchip and its shareholders.

After a nice rebound in recent sessions, the Brainchip Holdings Ltd (ASX: BRN) share price is crashing down to earth again on Tuesday.

In morning trade, the struggling semiconductor company's shares fell as much as 16% to 42.7 cents.

A man slumps crankily over his morning coffee as it pours with rain outside.

Image source: Getty Images

Why is the Brainchip share price crashing?

Investors have been hitting the sell button this morning after Brainchip released its annual general meeting presentation and speeches.

The latter includes a few choice statements that don't paint a very positive picture of how things are going for the meme stock.

Brainchip Chairman, Antonio J. Viana, acknowledged that the company's sales performance was abject and its failure with the hyped-up Akida 1.0 product was largely to blame. He commented:

Let me be clear, nobody at BrainChip is happy or content with our current position. We haven't hit any significant stride yet with respect to revenue. No one is satisfied, and no one should be.

The trick for many companies comes when the move from technology to product takes place. In the past, BrainChip frankly hasn't gotten this right. We haven't had a product that can see its way into end production systems.

The company's under-fire CEO, Sean Hehir, adds:

As we engaged with prospects in the first half of the year, we heard consistent feedback from virtually all engagements, which was while Akida 1.0 was, and is, at leadership levels of performance and power, the addressable number of uses cases was arguably narrow and targeted in places where existing "good enough" solutions were already in place. We simply were not going to be successful with the Version 1 product.

What's next?

Much like they did with version 1, management has hailed version 2 as the key to its future success. Hehir said:

Fundamentally, Akida 2.0 is a platform that substantially increases the capacity of fan-less, highly efficient devices at the edge to run complex models and networks. We can now supercharge the edge AI device to efficiently run complex AI computation, untethered from the cloud, and without CPU intervention, and reduced system load.

Though, it is worth remembering that there certainly is a lot riding on this new platform and nothing to say that it won't be another failure and destroy even more shareholder wealth. Especially given the competition it faces in the industry.

Finally, it isn't known yet if disgruntled shareholders have dealt Brainchip's remuneration report a strike. Management has attempted to justify its generous payouts, but we will soon find out if that has been enough to pacify shareholders.

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 Scott Phillips.

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