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It’s been a green day so far for ASX mining shares, with the BHP Group Ltd (ASX: BHP) share price leading the iron ore majors, up 3.2% at the time of writing.

Shares in ASX miner Rio Tinto Limited (ASX: RIO) are currently trading 2.75% higher and the Fortescue Metals Group Limited (ASX: FMG) share price is up 1.77%. In comparison, the S&P/ASX 200 Index (ASX: XJO) is up 0.5%.

What’s news for BHP today?

In positive news for BHP, leading US broker Jefferies believes shares in US-listed BHP Group Ltd (NYSE: BHP) could lift by around 18% from here. The ASX-listed company often follows the movement of the international-listed BHP shares so this could be a positive for the company’s Australian share price today.

As reported in The Australian, Jefferies has slapped a price target of US$82 on the energy giant, which is currently priced at US$69.21 on the New York Stock Exchange. The price target of US$82 therefore implies a possible rise of around 18% over the next year.

What’s been happening to the BHP share price recently?

Since 26 May 2022, BHP shares on the ASX have lifted close to 10%. However, the share price has been roughly flat over the last month.

At the start of June 2022, BHP announced that the merger of its oil and gas portfolio with Woodside Energy Group Ltd (ASX: WDS) via an all-stock merger had completed.

BHP shareholders received new Woodside shares. As part of completion, BHP has made a net cash payment of approximately US$0.7 billion to Woodside.

Approximately US$0.3 billion in cash will be left in the BHP Petroleum bank accounts to fund the ongoing operations. This reflects the net cash flows generated by BHP Petroleum, less cash dividends paid by Woodside to BHP, between the merger effective date of 1 July 2021 and completion.

BHP CEO Mike Henry said at the time:

The merger of our petroleum assets with Woodside creates a global energy company with the scale and opportunity to help supply the energy needed for global growth and development in a rapidly decarbonising world.

Our shareholders will now have exposure to assets in two organisations, BHP and Woodside, each with a very clear focus, strategy and value proposition. BHP’s world class portfolio is weighted towards commodities which support economic growth and have decarbonisation upside and combined with our operational excellence will underpin attractive returns and long-term value growth.

What do other brokers think of the mining giant?

Some of the other most recent broker ratings on the ASX mining share aren’t as optimistic as Jefferies.

For example, Morgan Stanley currently has a rating of ‘equal-weight’, which is essentially ‘hold’, on the BHP share price with a price target of $46.20. That implies no movement of BHP shares over the next year. The broker thinks that Rio Tinto Limited (ASX: RIO) is a better mining pick.

Ord Minnett also recently rated BHP a hold, with a price target of $45. That implies a slight decline of the BHP share price over the next year. The broker thinks that BHP may not generate as much profit in the medium-term, particularly if the iron ore price falls.

However, Macquarie is still optimistic about the business, with a price target of $57. That implies upside of more than 20%. It likes the decarbonisation-focused portfolio of commodities like nickel, potash and copper.

The post Why is the BHP share price having such a stellar day? appeared first on The Motley Fool Australia.

More reading

• What’s coming up for the Woodside share price in June?
• Own BHP shares? Here’s how the miner plans to offset lower iron ore prices
• ‘Woodside will distribute US$20bn in dividends over the coming decade’: Morgan Stanley
• Why GrainCorp, New Hope, Tabcorp, and Woodside shares are pushing higher
• Woodside shares or Whitehaven? What’s the best ASX 200 value play?

Motley Fool contributor Tristan Harrison 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 recommended Macquarie Group Limited. 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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The Westpac Banking Corp (ASX: WBC) share price is suffering, sliding 5.25% lower at midday.

It comes as the bank is the first of the big four to pass the Reserve Bank of Australia’s interest rate hike onto home loan customers. And while higher interest rates are generally good for banks’ margins, their long-term impact might not be pretty.

At the time of writing, the Westpac share price is trading at a three-month low of $22.18, 5.25% lower than its previous close.

For context, the S&P/ASX 200 Index (ASX: XJO) is recording a 0.76% gain.

Let’s look at what might be going on with the Westpac share price today.

Westpac share price tumbles on Wednesday

The Westpac share price is suffering alongside the S&P/ASX 200 Financials Index (ASX: XFJ) today.

The sector is currently down 2%, with Westpac coming in as its biggest weight. The other big four banks are also struggling, each slipping between 2.3% and 3.7%.

Of course, rising rates allow banks to reprice their loan offerings, bolstering net interest margins (NIMs). However, Morgan Stanley is wary of long-term detriment. It believes the move will slow housing loan growth while inflation pressures costs.  

“We believe the near-term earnings outlook remains sound, but the risk of a trading multiple de-rating has risen,” Morgan Stanley head of Australian research Richard Wiles said, as quoted by the Australian Financial Review.

Westpac might also be front of mind on Wednesday after it was the first to pass on the full rate hike to its home loan customers. It hasn’t moved on its savings accounts yet, however, from tomorrow Westpac will offer a 12-month term deposit with a 2.25% interest rate – 2% higher than its current 12-month term deposit rate.

“We expect the other big banks to follow Westpac’s lead and also pass on the RBA rate hike in full to their mortgage customers,” RateCity.com.au research director Sally Tindall said. She continued:

Many banks remain unwilling to substantially hike their savings rates until Australians start burning through some of the record amount of cash they’ve got stashed away.

However, Federal Treasurer Jim Chalmers told 3AW this morning he believes the banks should pass the hike onto savings deposits. The Treasurer said the Australian public will be “watching them like hawks” in wait.

The Westpac share price is currently 3.9% higher than it was at the start of 2022. Though, it’s 17% lower than it was this time last year.

The post Westpac share price tumbles 5% on Wednesday appeared first on The Motley Fool Australia.

More reading

• ASX 200 midday update: Boral rockets, big four banks tumble
• Which ASX 200 bank is the first to pass on the full RBA rate hike?
• How does the Westpac dividend yield compare to the other ASX banks?
• 2 excellent ASX dividend shares that experts rate as buys
• Top brokers name 3 ASX shares to buy next week

Motley Fool contributor Brooke Cooper 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 recommended Westpac Banking Corporation. 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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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The Shiba Inu (CRYPTO: SHIB) cryptocurrency had investors dreaming of instant riches last year. The digital coin rose tenfold in October, mostly thanks to a series of bullish tweets from Tesla CEO Elon Musk. At the peak of that hype cycle, the sky seemed to be the limit.

But the blaze of publicity has been fading since November. Shiba Inu’s price has fallen 88% below October’s zenith. Some investors may be thinking about this token as a turnaround story in the making, hoping that coins bought at these ultra-low prices will rise from the ashes to even greater heights, phoenix-like.

Unfortunately, that’s not likely to happen. Shiba Inu has had its moment in the spotlight and it’s time to look for the next massive multibagger instead. This time, let’s pick a name that can grow your investment many times over and looks capable of holding on to those gains in the long run. I would suggest a closer look at freelance services specialist Fiverr International (NYSE: FVRR).

A wide-open buying window

Like Shiba Inu, Fiverr has taken a drastic haircut recently. The stock had zoomed into the public eye at the start of the pandemic, where freelance gigs performed over the internet seemed like a great use for lockdown-based spare time. And a few extra dollars in your pocket didn’t hurt during this period, which was plagued by a wave of layoffs and furloughs.

When coronavirus vaccines became widely available, market makers suddenly decided that Fiverr’s golden age was about to hit the wall. That’s where the price drop started. In all fairness, Fiverr’s stock traded at an unsustainable valuation of 47 times sales in January 2021. A correction was in order at the time, but now it has gone way too far down instead.

Great business results

You see, the gig economy is here to stay, and Fiverr is a leading force in that category.

Work-from-home policies turned out to be quite popular with information workers. This revelation is good for Fiverr in a couple of ways. First, freelancers can easily plug their services into the remote-enabled workflows of this new era. Second, the time you used to spend commuting to the office can now be spent on catching a couple of quick freelance gigs on the side instead.

So Fiverr’s growth never hit that seemingly inevitable brick wall, and it’s only a matter of time before the stock starts to reflect this reality again. Let’s compare and contrast Fiverr’s plunging stock chart with its booming top-line sales:

FVRR Revenue (TTM) data by YCharts

Furthermore, Fiverr isn’t some unprofitable gadfly. The company generates cash profits on a regular basis and trades at roughly 40 times free cash flows nowadays. That untenable triple-digit price-to-sales ratio is back down to less than 6. These are highly reasonable valuation ratios for a high-octane growth stock like Fiverr.

And don’t forget that we’re looking at a minnow swimming in a massive pond here. Fiverr’s trailing sales add up to just $316 million right now, but the global market for freelance service arrangements is already estimated at $115 billion in these early days of the emerging gig economy.

Where do I sign up?

Fiverr’s stock is much too cheap to ignore right now. In fact, I doubled down on my own real-money Fiverr stake last week. This is one of the most inviting investment opportunities on the market. That includes flash-in-the-pan cryptocurrencies like Shiba Inu. Fiverr’s stock has suffered a price reduction similar to the dog-themed crypto ticker’s, but only one of the two investment names is likely to spring back to life again. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Thinking about buying Shiba Inu? Read this first appeared first on The Motley Fool Australia.

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Anders Bylund has positions in Fiverr International and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Fiverr international, Twitter and Tesla. 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.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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At lunch on Wednesday, the S&P/ASX 200 Index (ASX: XJO) is on course to rebound from yesterday’s selloff. The benchmark index is currently up 0.6% to 7,138.1 points.

Here’s what is happening on the ASX 200 today:

Boral rockets on new CEO appointment

The Boral Limited (ASX: BLD) share price is rocketing higher on Wednesday. This follows news that the building products company has appointed Vik Bansal as its new CEO. Mr Bansal stepped down from the role of CEO of Cleanaway Waste Management Ltd (ASX: CWY) last year amid a scandal which saw him accused of creating a culture of workplace bullying. This overshadowed an otherwise highly successful six years at Cleanaway.

Big four banks tumble

Australia’s big four banks are tumbling today. The worst performer in the group has been the Westpac Banking Corp (ASX: WBC) share price with a 4% decline. This appears to have been driven by concerns that an aggressive tightening cycle by the Reserve Bank could create challenges for the banking sector. The market was previously expecting a more gradual and measured tightening cycle.

Uranium shares take off

The Paladin Energy Ltd (ASX: PDN) share price is taking off on Wednesday along with other uranium shares. This follows news that the United States is seeking to wean itself off Russian uranium for its nuclear reactors. The Biden Administration is seeking support for a US$4.3 billion plan to help with the transition.

Best and worst ASX 200 performers

The best performer on the ASX 200 on Wednesday has been the Atlas Arteria Group (ASX: ALX) share price with a 16% gain. This follows news that IFM Global Infrastructure Fund has acquired a 15% stake in the toll road operator at a significant premium to its last close price. Going the other way, the worst performer has been the Westpac share price with a 4% decline amid weakness in the banking sector.

The post ASX 200 midday update: Boral rockets, big four banks tumble appeared first on The Motley Fool Australia.

More reading

• Which ASX 200 bank is the first to pass on the full RBA rate hike?
• Why is the Paladin Energy share price jumping 13% today?
• Atlas Arteria share price leaps 16% amid takeover speculation
• Boral share price charges higher amid controversial CEO appointment
• 5 things to watch on the ASX 200 on Wednesday

Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. 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 recommended Westpac Banking Corporation. 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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It’s likely that all of the S&P/ASX 200 Index (ASX: XJO) banks will move to pass on the latest rate rise from the Reserve Bank of Australia (RBA). Though as of this morning, only one has done so.

Yesterday, the RBA surprised most analysts with a higher than expected 0.5% increase in the official cash rate. The consensus forecast had been for a 0.25% or 0.4% rise. The official cash rate now stands at 0.85%, with RBA governor Philip Lowe indicating a series of additional hikes ahead.

Despite financial stocks being among the few to potentially benefit from higher rates, ASX 200 bank shares sold off alongside the broader index following the 2:30pm AEST announcement from the central bank.

Of course, for the banks to increase their lending margins amid the higher official cash rate, they need to up their own lending rates.

Westpac the first mover among the ASX 200 banks

The first of the ASX 200 banks to do so is Westpac Banking Corp (ASX: WBC).

This morning Westpac announced it was raising its home loan variable interest rates by 0.5% for both new and existing customers. The higher rates take effect starting 21 June, two weeks post the RBA’s hike.

While that won’t come as good news to customers with sizeable mortgages, savers will take heart from the bank’s introduction of a new 12-month term deposit paying a 2.25% interest rate.

Commenting on the rate rise, Westpac consumer and business banking chief executive Chris de Bruin said:

We know a change in interest rates affects every budget differently. Our customers have managed their finances carefully during the pandemic, with many putting more funds aside in their savings and offset accounts. This means the majority of our customers are ahead on mortgage repayments and have a buffer available to help them manage an interest rate increase.

Westpac share price snapshot

The Westpac share price is the worst performer among the ASX 200 banks today, down 5.3% in morning trade.

Year to date, Westpac has outperformed the other banks and the ASX 200, with shares up 3.8% so far in 2022.

The post Which ASX 200 bank is the first to pass on the full RBA rate hike? appeared first on The Motley Fool Australia.

More reading

• ASX 200 midday update: Boral rockets, big four banks tumble
• How does the Westpac dividend yield compare to the other ASX banks?
• 2 excellent ASX dividend shares that experts rate as buys
• Top brokers name 3 ASX shares to buy next week
• What are brokers forecasting for the Westpac share price in June?

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 recommended Westpac Banking Corporation. 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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It isn’t only the risk of recession that ASX share investors need to worry about as the threat of stagflation rears its ugly head.

The aggressive interest rate posture taken by the Reserve Bank of Australia (RBA) yesterday is fuelling speculation about the dreaded ‘S’ word.

While economists largely agree that a recession here is unlikely thanks to our considerable exposure to commodities, stagflation could be a more likely outcome.

What is stagflation?

Stagflation refers to an environment of persistent high inflation and a stagnant economy with high unemployment.

Fortunately, employment is still strong — but that could change quite quickly. The RBA’s 50-basis point (bps) increase to the cash rate and promises of more to come will inevitably slow economic growth. The collateral damage to that outcome is higher unemployment.

High prices and growth headwinds

It isn’t only the RBA with its finger on the rate-hike machine-gun trigger. The United States Federal Reserve is also moving quickly to lift rates in the US.

There is a greater chance that the US could slip into a mild recession, defined as two quarters of negative gross domestic product (GDP) growth. Again, this doesn’t mean Australia will be dragged into a recession as well, but such an outcome will drag on growth here.

Impact of stagflation on ASX shares

This again lifts the risk of stagflation for us, which will have consequences for ASX shares. Higher costs caused by inflation could squeeze companies. But they’ll have limited ability to pass on rising costs to consumers due to the economic malaise.

However, the pain won’t be uniformly felt across the board. Some ASX sectors will be impacted more than others. Discretionary retail is one example where sellers have to pay more for goods as consumer spending slows.

Best performing asset class

On the other hand, some ASX shares could benefit from stagflation. These tend to be defensive shares, commodity producers and gold.

A report by Schroders illustrates this point. The wealth manager studied the average real (inflation-adjusted) year-on-year total return of major asset classes since 1973.

While the study was US-centric, it shows the best stagflation performers were gold (+22.1%). The next best performing were commodities (+15.0%), followed by real estate investment trusts (REITs) (+6.5%).

Schroders explains:

This makes sense. Gold is often seen as a safe-haven asset and so tends to appreciate in times of economic uncertainty. Real interest rates also tend to decline in periods of stagflation as inflation expectations rise and growth expectations fall. Lower real rates reduce the opportunity cost of owning a zero-yielding asset such as gold, thereby boosting its appeal to investors.

The ASX shares that may outperform during stagflation

Thankfully for our resources-heavy ASX share market, commodities are also tipped to outperform. Again, this is logical as the source of inflationary pressure comes from raw materials and energy.

However, it’s arguably the lowest cost producers that are best placed. This is because demand is likely to slow due to high prices.

Meanwhile, other defensive ASX shares such as REITs are also protected as their rental contracts often include an inflation-linked adjustment allowance.

The post What is stagflation and how will it impact ASX shares? appeared first on The Motley Fool Australia.

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• Why is the Paladin Energy share price jumping 13% today?
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Motley Fool contributor Brendon Lau 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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The Paladin Energy Ltd (ASX: PDN) share price has been a very strong performer on Wednesday.

In morning trade, the uranium producer’s shares are up 13% to 79.5 cents.

Why is the Paladin Energy share price shooting higher?

Investors have been bidding the Paladin Energy share price higher today despite there being no news out of the company.

However, there has been some very positive industry news which is giving uranium shares a big lift.

For example, the Boss Energy Ltd (ASX: BOE) share price is currently up 11%, the Deep Yellow Limited (ASX: DYL) share price is currently up 8%, and the Peninsula Energy Ltd (ASX: PEN) share price is up 20%.

What’s happening?

The catalyst for the rise in uranium shares on Wednesday appears to be news out of the United States.

According to Bloomberg, the Biden administration is pushing lawmakers to support a US$4.3 billion plan to wean the United States off Russian uranium imports for its nuclear reactors.

And while the Biden administration is seeking to buy enriched uranium directly from American producers as part of the plan, given Australia’s close ties with the United States, investors appear optimistic that local producers could also become part of the deal.

Particularly given that the United States only has one remaining commercial enrichment facility. This is a New Mexico plant owned by British-German-Dutch consortium, Urenco.

Not that this would matter to Peninsula Energy, as it already has the Lance Project in Wyoming, USA. It is also worth noting that Paladin Energy has the Michelin project over the border in Canada.

Overnight, the Global X Uranium ETF jumped as much as 7.4% to its highest intraday price in a month on the news.

The post Why is the Paladin Energy share price jumping 13% today? appeared first on The Motley Fool Australia.

More reading

• What’s going wrong for ASX uranium shares on Wednesday?
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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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The Atlas Arteria Group (ASX: ALX) share price is leaping on news IFM might be lining up a takeover approach.

The IFM Global Infrastructure Fund has snapped up around 15% of the company’s stock and indicated it might submit a takeover bid.

At the time of writing, the Atlas Arteria share price is $8.26, 16.27% higher than its previous close.

Though, that’s down from its intraday – and new 52-week – high of $8.35 – representing a 17.6% gain.

Let’s take a closer look at today’s news from the global toll road operator.

Atlas Arteria flags potential takeover interest

The Atlas Arteria share price is rocketing higher after IFM indicated that it might ask for limited company information to potentially build an acquisition offer.

To kick start the potential takeover process, the fund has acquired a 15% stake in the S&P/ASX 200 Index (ASX: XJO) infrastructure giant.

It paid $8.10 per share after the market closed yesterday for the final piece of that holding. Such a price tag represents a 14% premium on Atlas Arteria’s previous close.  

A full takeover of Atlas Arteria could set IFM back $7.8 billion, the Australian Financial Review reports.

According to a release from the company, IFM indicated that any proposal it might submit would be subject to the completion of due diligence, as well as other conditions.

So far, IFM hasn’t requested more information from Atlas Arteria, nor has it proposed to buy any additional shares.

In fact, the company was clear in saying there’s no guarantee of any takeover bid at this stage. Thus, shareholders don’t need to take any action.

Nevertheless, the potential of a future acquisition offer – as well as IFM’s apparent belief Altas Arteria shares are worth $8.10 apiece – has excited the market this morning.

IFM was the leader of the consortium that snapped up the formerly-ASX listed Sydney Airport in February.

Atlas Arteria share price snapshot

Today’s gains have helped boost the Altas Arteria share price even further into the green.

Right now, the company’s stock is 19.5% higher than it was at the start of 2022. It has also gained 29% since this time last year.

The post Atlas Arteria share price leaps 16% amid takeover speculation appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper 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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The Fonterra Shareholders Fund (ASX: FSF) share price is surging higher, up 4.8% in early trade.

Fonterra shares closed yesterday at $2.75 and are currently trading for $2.88.

This comes as the dual-listed dairy cooperative announces a major share buyback.

What was the share buyback announcement?

Fonterra shares are leaping higher after the company reported it is earmarking up to $50 million for an on-market share buyback program. The buyback is set to start at the end of the month, on 30 June.

The company said the buyback could run for as long as 12 months, with Fonterra buying shares at market price.

During that time Fonterra said it “will continue to assess market conditions, its prevailing share price, available investment opportunities and all other relevant considerations”. Management retains the right to halt or cancel the program at any time.

The company will cancel all the shares its buys back. This will reduce the number of shares on issue, which should offer a tailwind for Fonterra stock.

Regulations limit the maximum number of shares the company can acquire to 5% of Fonterra’s shares that were on issue 12 months ago. That works out to just under 80.7 million shares. That number also includes the $300 million on-market buyback (the ‘Transitional Buyback’) Fonterra announced last year to help the transition to a Flexible Shareholding capital structure. That process is still pending.

Regarding the new program, management believes the stock is undervalued at current prices, driving its decision for the buyback.

“The Co-op considers the prevailing price, particularly since late April, has undervalued Fonterra shares, which is a key reason for announcing this buyback,” Fonterra chair Peter McBride said.

Fonterra share price snapshot

The Fonterra stock has struggled this year, down 19% since the opening bell on 4 January.

That compares to a year-to-date loss of 7% posted by the All Ordinaries Index (ASX: XAO).

At the current price, Fonterra shares pay a 5.8% trailing dividend yield, unfranked.

The post Fonterra share price surges on $50 million share buyback announcement appeared first on The Motley Fool Australia.

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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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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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