BrainChip market cap is ‘not even close to where it can and should be’: CEO

A man looks stunned as a cloud explodes from his head representing the CogState share price crashing today in

A man looks stunned as a cloud explodes from his head representing the CogState share price crashing today in

On Wednesday morning, the BrainChip Holdings Ltd (ASX: BRN) share price is pushing higher.

At the time of writing, the artificial intelligence technology company’s shares are up 1% to $1.01.

Based on its shares outstanding, this means that BrainChip’s market capitalisation is now over $1.7 billion.

CEO tips market capitalisation to increase

While a market capitalisation of $1.7 billion for a company with next to no revenue seems ridiculous, particularly in the current environment, BrainChip’s CEO, Sean Hehir, feels it is justified. He also believes it can and should keep increasing.

In a recent interview with CommSec, Mr Hehir was asked about the company’s profitability and lofty market capitalisation.

He responded:

Do I think the market cap is fair? Or they say are you topped out? I think it is not even close.

The reason I say that is the [AI] market itself. The market is very, very big. And so we have got a lot of room to grow. So, I think the market cap is not even close to where it can and should be over time.

Mr Hehir did, however, shy away somewhat from the question about profitability. He instead focused on the company’s partnerships and said the company intends to establish more and make them “much deeper, more operational every single day to drive a lot of value.”

What about the long term?

Looking longer term, BrainChip’s CEO revealed that his aim is to build the company into the “de facto standard for edge AI for the entire world.”

Questioned on how the company can achieve this given the big budgets of its tech giant rivals, Mr Hehir said that he believes BrainChip’s small size means it is nimble and can react quickly. He also feels that its patent portfolio is strong and “very defensible.”

Time will ultimately tell if BrainChip is the real deal or just another tech wannabe that gets left behind by its big budgeted rivals. But with a market capitalisation approaching $2 billion and no sales to demonstrate that there’s a market for its Akida technology, the market certainly has high hopes.

The next 12 months are likely to be incredibly pivotal now it is in the commercialisation stage. If meaningful sales don’t materialise, the BrainChip share price could easily fall from grace. This makes it a very high risk option for investors and too spicy for my tastes.

The post BrainChip market cap is ‘not even close to where it can and should be’: CEO appeared first on The Motley Fool Australia.

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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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