Why Brainchip (ASX:BRN) shares are topping the ASX today

Brainchip Holdings Ltd (ASX: BRN) shares are once again topping the ASX charts today. You might think it would be because of a share price movement. After all, the Brainchip share price has quickly become one of the hottest stocks of discussion around the proverbial watercooler in recent weeks. That’s what tends to happen when a share goes from 5 cents in May to 75 cents by September (a 1,400% return). In fact, just today, Brainship shares have fluctuated between 97 cents and 64 cents a share. Talk about volatile!

But no, Brainship’s share price movements today are not what we’re here to talk about. At the time of writing, the shares are ‘only’ up 2.74%. Very ‘ho-hum’ when you consider other All Ordinaries Index (ASX: XAO) shares like Nitro Software Ltd (ASX: NTO) are up more than 5%.

No, today we’re talking about Brainchip in terms of volume.

Volume refers to the sheer number of shares that are swapping hands on any given day. Normally, it’s the S&P/ASX 200 Index (ASX: XJO) blue chip shares like Westpac Banking Corp (ASX: WBC), Telstra Corporation Ltd (ASX: TLS) and CSL Limited (ASX: CSL) that top the volume charts most days, as they are the largest, most liquid and most heavily traded companies on the market.

So according to data from Commonwealth Bank of Australia‘s (ASX: CBA) CommSec platform, around 10.28 million Westpac shares have been traded today. For Telstra, it’s 53.33 million. CSL shares? Just 1.14 million (probably explained by CSL’s relatively large share price).

Brainchip?

Hold onto your seats. According to CommSec, 367.15 million Brainchip shares have changed hands today. That’s more than Westpac, Telstra, CSL, CBA, Wesfarmers Ltd (ASX: WES), Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW) — put together.

Yowser! No wonder Brainship went from 97 cents to 64 cents back up to 76 cents in one day.

Why Brainship shares are topping the volume charts today

This mindboggling volume figure can only be put down to one thing in my view – short-term trading. When a share like Brainchip gives investors such ridiculous gains in a very short space of time, you are going to see a lot of investors flood in to try and make a quick 10-20%. Those kinds of investors typically have a lot riding on the ‘bet’, so they tend to be very ‘trigger-happy’ with their buying and selling.

We Fools don’t really like to see this kind of thing play out. It’s opportunism at its worst and just evident of pure gambling in my view. So if you’re bullish on Brainchip, just ignore this kind of noise and focus on your long-term thesis. If you’re looking to buy into Brainchip (hopefully not because of its recent share price moves alone), I think waiting until some of this froth has subsided is probably a good idea.

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Sebastian Bowen owns shares of Telstra Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET, Wesfarmers Limited, and Woolworths Limited. The Motley Fool Australia has recommended Nitro Software Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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