Why has the BrainChip share price fallen 16% in a week

Rede arrow on a stock market chart going down.Rede arrow on a stock market chart going down.

The BrainChip Holdings Ltd (ASX: BRN) share price has had a poor run in the past week.

Since last Wednesday, the artificial intelligence (AI) technology company’s shares have shed a touch over 16%.

In particular, the BrainChip share price has been deep in the red across the last three trading days.

At yesterday’s market close, BrainChip shares ended the day 5% down at 95 cents apiece.

What’s driving BrainChip shares lower?

While the company has been relatively quiet on the news front, investors have offloaded the BrainChip share price.

This comes after some concerns from investors that the company’s market capitalisation may have gotten ahead of itself.

BrainChip is currently valued at $1.71 billion and will only just sit inside the S&P/ASX 200 Index (ASX: XJO) from 20 June.

However, with an exorbitant market cap, it’s worth noting that the company generates very little revenue.

In its last quarterly report for the period ending 31 March, BrainChip received US$0.2 million in cash receipts from customers. And that’s a decrease of 81% from the prior US$1.1 million collected in Q4 FY21.

Furthermore, BrainChip shares rose strongly last month following investor hype regarding its acceptance into the Arm AI Partner Program.

It appears the sentiment has also worn off in the company.

Nonetheless, the S&P Dow Jones Indices announced some changes in its quarterly rebalance of the S&P/ASX Indices in which Brainchip will be added.

What this means is that a majority of fund managers can only buy shares within a certain index. The updated list may help prop up BrainChip shares as well as investors looking to take advantage of the upcoming change.

BrainChip share price snapshot

Regardless of treading lower in recent times, the BrainChip share price has gained almost 70% over the last 12 months.

When looking at year-to-date, its shares are up around 40%.

BrainChip has approximately 1.74 billion shares on its registry.

The post Why has the BrainChip share price fallen 16% in a week appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras 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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