Brainchip share price plunges 14% to fresh 3-year lows

ASX investors are once again hitting the sell button on Brainchip shares.

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The BrainChip Holdings Ltd (ASX: BRN) share price is plummeting on Wednesday.

Unfortunately for longer-term shareholders, that's something they've heard all too often over the past 18 months.

In afternoon trade, shares in the ASX artificial intelligence (AI) chip maker are swapping hands for 21.5 cents apiece. That's down 14% from yesterday's closing price of 25 cents.

And it represents a fresh three-year low for the Brainchip share price.

So, what's going on?

Why is the Brainchip share price getting hammered?

With today's intraday losses factored in, the ASX AI stock is now down a painful 71% since the opening bell on 3 January.

The company has high ambitions with its neural network chips, an AI-related concept intended to simulate the function of the human neuron.

While progress has been made on paper and in early designs, the revenue has been decidedly lagging, which has seen investors bid the Brainchip share price ever lower.

At its half-year results, reported last month, management revealed that costs over the six months had leapt 30% year on year to reach US$16.9 million.

As for revenue? That came in at US$116,000.

Holding cash and cash equivalents of some US$21 million, investors may be doubting the company has enough funds to see it through to the successful completion and sales of its second-generation Akida technology.

Adding pressure to the Brainchip share price earlier this week was the company's exodus from the S&P/ASX 200 Index (ASX: XJO) in the latest S&P Dow Jones Indices quarterly rebalance.

That means those fund managers restricted to investing in ASX 200 stocks won't be able to buy Brainchip shares anymore. And those already holding the stock will need to unload it.

Following Monday's rebalance, Brainchip will no longer be included in any index tracking funds intended to mirror the performance of the ASX 200.

Motley Fool contributor Bernd Struben 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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