Brainchip Holdings Ltd (ASX: BRN) shares were hammered on Tuesday.
The embattled semiconductor company's shares crashed almost 18% to end the day at 42 cents.
Unfortunately, the selling has continued in early trade, with Brainchip's shares sinking a further 6% to 39.5 cents.
That's despite the company announcing the granting of a new patent in the United States.
Why are investors abandoning Brainchip shares?
Investors have been hitting the sell button this week after the company held its annual general meeting and revealed how bad things were going.
Brainchip's chair, Antonio Viana, 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.
Viana also admitted that despite spending tens of millions over the last few years, the company has yet to develop a product that is marketable. He adds:
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.
Shareholders strike back
Shareholders clearly are not happy with the state of affairs and made that known to management at the annual general meeting.
While the company's executives had their performance rights and restricted stock units narrowly approved, the same cannot be said for its remuneration report. Approximately 52.6% of votes were cast against the report, meaning it was not carried.
It also means that Brainchip has been dealt its first strike. If shareholders were to do the same at next year's annual general meeting, they will be invited to then vote on a board spill. This would then see its directors forced to stand for re-election at another meeting held within 90 days.
In a short statement, Brainchip said:
The Board of BrainChip acknowledges the lack of support for the Remuneration Report resolution. While the Company implemented numerous changes based on shareholders' feedback received last year, as articulated in the Chairman's 2023 AGM opening remarks, the Board is committed to continuing our constructive engagement with shareholders while focusing on the execution of the Company's strategy.
This surely can't be a surprise to the company's board, though. Brainchip has rewarded its executives collectively with millions of dollars' worth of free shares partly in response to the commercialisation of a product that was ultimately deemed to be not fit for purpose. At the same time, it has destroyed significant shareholder wealth and burned through significant cash.
Time will tell if this meme stock ever actually delivers the goods for investors, but I wouldn't bet on it.
