Sliding Doors: Brainchip vs Xero shares

In the film 1998 Sliding Doors, the viewer follows around Gwyneth Paltrow across two different storylines. In one storyline we see how her life unfolds if she catches her train, in the other we see what happens when she misses it.

Investing can be a lot like Sliding Doors. When investors make an investment, they are choosing one ASX share over another. Each investment has its own potential storyline and each can shape your life and, more specifically, your wealth.

So, let’s go back a year and see what would have happened if you had invested $10,000 into either Brainchip Holdings Ltd (ASX: BRN) and Xero Limited (ASX: XRO).

Investing $10,000 in Brainchip shares

I have been very vocal over the last couple of years, warning investors off Brainchip shares. So, hopefully I have prevented at least a handful of readers from losing significant wealth to this struggling semiconductor company.

For example, over the last 12 months, Brainchip shares have lost 76% of their value. This means that a $10,000 investment would now be worth just $2,400.

This has been driven by the company’s abject performance (less revenue than a thrift store) and an extremely challenging outlook due to its competition with absolute tech behemoths.

In addition, the fact that none of its rivals, which spend billions on R&D each quarter, have lobbed a takeover offer its way or made a strategic investment, appears to indicate that they don’t believe its technology is a threat.

What about Xero?

If instead of buying Brainchip shares, you had put $10,000 into Xero shares, you would be celebrating today.

Over the same period, thanks to its strong performance in FY 2023 and so far in FY 2024, the cloud accounting platform provider’s shares have risen 47%.

This would have turned your investment into $14,700, which means you’re now $12,300 better off than if you had taken the other option.

It also means that Brainchip shares would have to rise over 500% to just catch up. And with the company still looking severely overvalued with a $400 million market capitalisation, that looks like nothing short of wishful thinking.

The post Sliding Doors: Brainchip vs Xero shares appeared first on The Motley Fool Australia.

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More reading

• Here’s how the ASX 200 market sectors stacked up this week
• ASX blue-chip stocks: My best of the best for January 2024
• The No. 1 ASX 200 shares of each market sector in 2023
• These were the best-performing ASX 200 tech shares of 2023
• Why Core Lithium, Sayona Mining, WA1, and Xero shares are dropping today

Motley Fool contributor James Mickleboro has positions in Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Xero. The Motley Fool Australia has positions in and has recommended Xero. 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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