Tag: Motley Fool

BHP has been hitting headlines lately amid concerns about the federal government’s planned “same job, same pay” legislation.

BHP shares are down 0.2% at the time of writing, currently fetching $44.11 apiece. For perspective, the S&P/ASX 200 Materials Index (ASX: XMJ) is 0.05% lower.

Let’s take a look at why BHP shares are in focus today.

What’s going on with BHP?

BHP has expressed concern about the federal government’s proposed “same job, same pay” legislation.

The government is seeking feedback on the proposed reform that would see labour-hire workers paid at least as much as directly employed workers doing the same job.

BHP is claiming the legislation could cost the company $1.3 billion a year, impacting jobs.

In a submission, quoted by the Sydney Morning Herald, BHP said:

BHP estimates the financial impact of [same job, same pay] SJSP to our Australian operations will be up to $1.3 billion annually.

This cost is equivalent to the labour cost of approximately 5000 full-time employees across our operational workforce.

Commenting further, BHP said to “address a cost impact of this magnitude”, it would “clearly need to review” the impact on the company’s Australian operations and the “workforce that supports it”.

Written submissions for the proposed legislation closed on 12 May with the federal government planning to introduce the legislation in Spring 2023.

Workplace Relations Minister Tony Burke told Sky News on Sunday “the principle that we took to the election is the principle we intend to legislate”.

In a statement quoted by the Australian Financial Review, Burke made “no apologies” for the policy. He said:

The details of this policy are not yet settled. That is the point of the consultation we’re doing with BHP and others.

If you close a loophole to stop workers being ripped off, it will result in an increase in the wages budget of any company that was using the loophole. We make no apologies for that.

BHP shares are in the red at the time of writing, but other ASX mining shares are faring better in afternoon trade. Rio Tinto shares are up 0.89% while Fortescue shares are 0.34% higher.

Iron ore futures for a June 2023 China contract (62% Fe Fines) is currently down 0.68% on the Singapore Exchange.

Share price snapshot

The BHP share price has climbed 3.6% in the past 12 months.

BHP has a market capitalisation of about $224 billion based on the latest share price.

The post Why is everyone talking about BHP shares on Tuesday? appeared first on The Motley Fool Australia.

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More reading

• Here’s what ANZ’s iron ore forecast could mean for the BHP share price in 2023
• 5 ASX 200 shares to buy according to brokers
• The copper price could explode. This is the ASX share to take advantage
• Why BHP shares made our headlines this week
• Buy these ASX shares with big dividend yields: Goldman Sachs

Motley Fool contributor Monica O’Shea 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 S&P/ASX 200 Index (ASX: XJO) is back on form on Tuesday. In afternoon trade, the benchmark index is up 0.3% to 7,286.3 points.

Four ASX shares that are rising more than most today are listed below. Here’s why they are charging higher:

Catapult Group International Ltd (ASX: CAT)

The Catapult share price is up almost 7% to 78.5 cents. Investors have been buying this sports technology company’s shares after it delivered a strong full-year result. Catapult reported a 21.8% increase in SaaS revenue to US$84.4 million for the year. The company also revealed that it finished the year strongly, with operating earnings improving by a massive US$15.4 million half on half to US$2.2 million. In light of this, management expects to be free cash flow positive in FY 2024 without the need to raise capital.

OFX Group Ltd (ASX: OFX)

The OFX share price is up 20% to $1.85. This follows the release of the international money services provider’s full-year results. OFX reported a 17.9% increase in turnover to $39.1 billion, a 42.4% jump in revenue to $225 million, and a 25.6% lift in net profit to $31.4 million.

TechnologyOne Ltd (ASX: TNE)

The TechnologyOne share price is up 3.5% to $15.84. This has been driven by the release of the enterprise software provider’s half-year results. TechnologyOne reported SaaS annual recurring revenue (ARR) up 40% to $316.3 million and profit before tax up 24% to $52.7 million. This was ahead of analyst estimates.

Zip Co Ltd (ASX: ZIP)

The Zip share price is up almost 14% to 62.5 cents. This morning, analysts at Shaw and Partners suggested that Zip would be a big winner from regulatory changes in the BNPL industry. The broker also feels that it would be an attractive takeover target for Afterpay owner Block Inc (ASX: SQ2).

The post Why Catapult, OFX, TechnologyOne, and Zip shares are charging higher appeared first on The Motley Fool Australia.

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More reading

• 3 ASX 200 stocks rocketing to never-before-seen heights today
• Guess which ASX 200 tech share just hiked its dividend 10%
• Afterpay should acquire Zip: broker
• TechnologyOne share price charges higher amid strong half-year growth
• 5 things to watch on the ASX 200 on Tuesday

James Mickleboro does not own any shares mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Catapult Group International, Ofx Group, Technology One, and Zip Co. The Motley Fool Australia has recommended Catapult Group International, Ofx Group, and Technology One. 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 S&P/ASX 200 Index (ASX: XJO) is in the green on Tuesday, thanks in part to three stocks each soaring to new all-time record highs.

So, what’s been going right for the trio lately? Let’s take a look.

3 ASX 200 shares reaching record highs on Tuesday

First up is logistics-focused software developer WiseTech Global Ltd (ASX: WTC). The ASX 200 tech stock launched 1.9% to a high of $74.34 today – a new record.

Interestingly, there’s been no news from the company in the last couple of months. The last time the market saw a price-sensitive update from WiseTech was back in February.

That’s when it dropped its first-half earnings, detailing a 35% lift in revenue and a 40% underlying net profit after tax (NPAT). It also boosted its interim dividend by 39% to 6.6 cents per share.

Joining the stock in posting a new record high is its ASX 200 peer TechnologyOne Ltd (ASX: TNE). The TechnologyOne share price peaked at $15.86 earlier today – marking a 3.5% increase.

The latest news from the software-as-a-service (SaaS) provider came far more recently. Indeed, its first-half earnings were published this morning.

It posted a 22% jump in revenue, a 24% improvement in post-tax profit, and a 10% increase in its interim dividend, with 4.62 cents per share pledged to investors.

Finally, bringing in the biggest gain was stock in ASX 200 biopharmaceutical company Telix Pharmaceuticals Ltd (ASX: TLX). It surged 5% to an all-time high of $12.05 on Tuesday.

The company was added to the ASX 200 in February 2022. That same year it launched its lead product, Illuccix, in the United States.

More recently, it revealed positive results from a study of its TLX250-CDx product and announced its acquisition of AI-powered platform Dedicaid.

The post 3 ASX 200 stocks rocketing to never-before-seen heights today appeared first on The Motley Fool Australia.

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More reading

• Guess which ASX 200 tech share just hiked its dividend 10%
• TechnologyOne share price charges higher amid strong half-year growth
• 5 things to watch on the ASX 200 on Tuesday
• Here are the top 10 ASX 200 shares today
• Analysts say these ASX 200 growth shares are top buys right now

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 positions in and has recommended Technology One and WiseTech Global. The Motley Fool Australia has positions in and has recommended WiseTech Global. The Motley Fool Australia has recommended Technology One. 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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ASX rare earths share Meteoric Resources NL (ASX: MEI) has skyrocketed in 2023, but what could be ahead for the explorer?

The Meteoric Resources share price has surged 281% from 5.3 cents at market close on 30 December to its current share price of 20.2 cents. In today’s trade, this ASX rare earths share is sliding 1.46%. For perspective, the S&P/ASX 200 Materials Index (ASX: XMJ) is 0.03% lower so far today.

Let’s take a look at the outlook for this ASX rare earths share.

What’s ahead?

Meteoric is exploring the Caldeira Rare Earth Element (REE) project in Brazil, a project with 30 licenses.

In an announcement on 1 May, Meteoric advised the project has a maiden mineral resource of 409 million tonnes at 2,626 parts per million (ppm) TREO.

Meteoric described the Caldeira project as the “world’s Highest Grade Ionic Adsorption Clay REE Deposit”.

Argonaut associate dealer Harrison Massey recommends Meteoric Resources as a buy. He noted the company’s global resource estimate and further drilling planned at the Caldeira Project.

Commenting on The Bull, he said:

The company has planned a further 100,000 metres of air core and diamond drilling to target high grade areas within the current resource model. The company is in the process of acquiring further licences surrounding the deposit.

MEI is well capitalised with $A25 million in the bank.

Earlier this month, Meteoric updated the market with a drilling update at the Caldeira Project. Eight of 11 new diamond holes showed a “significant depth extension of the target clay zone beneath the historic auger holes”.

Commenting on the news, executive chairman Dr Andrew Tunks said:

Current drilling indicates an increase in the thickness of the target clay zone of up to 45m beneath the historic auger drilling.

Clearly this shows that there remains considerable potential for additional REE mineralisation beneath the historic drilling.

Share price snapshot

The Meteoric Resources share price has rocketed 1920% in the last year.

This ASX rare earths share has a market cap of about $367 million based on the latest share price.

The post Up 280% in 2023, is the Meteoric Resources share price about to go stratospheric? appeared first on The Motley Fool Australia.

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More reading

• Why 29Metals, Brainchip, Qantas, and Serko shares are falling
• Why the Fortescue share price could be a winner following Joe Biden’s extraordinary G7 statements
• 2 ASX 200 lithium stocks just downgraded by a top broker
• Guess which ASX 200 tech share just hiked its dividend 10%
• Wesfarmers share price drops as Silk takeover competition heats up

Motley Fool contributor Monica O’Shea 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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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record a small gain. At the time of writing, the benchmark index is up 0.3% to 7,287.2 points.

Four ASX shares that have failed to follow the market higher today are listed below. Here’s why they are falling:

29Metals Ltd (ASX: 29M)

The 29Metals share price is down 4% to $1.01. This morning, this copper producer released an update on its guidance for Capricorn Copper following the cessation of operations after an extreme weather event. Investors appear disappointed with its revised guidance.

Brainchip Holdings Ltd (ASX: BRN)

The Brainchip share price has crashed 15% to 43.2 cents. This follows the release of the embattled semiconductor company’s annual general meeting presentation and speeches. Brainchip Chairman, Antonio J. Viana, commented: “Let me be clear, nobody at BrainChip is happy or content with our current position. We haven’t hit any significant stride yet with respect to revenue.”

Qantas Airways Limited (ASX: QAN)

The Qantas share price is down 2% to $6.36. Investors have been selling the airline operator’s shares after it released a market update. Qantas revealed that it expects to post an underlying profit before tax of between $2.425 billion and $2.475 billion for FY 2023. This appears to have fallen short of what some investors were expecting from the flag carrier airline.

Serko Ltd (ASX: SKO)

The Serko share price is down 6% to $2.99. This is despite there being no news out of the travel technology company. However, with its shares up strongly since last week, some profit taking could be happening today. The Serko share price is still up 11% since last Tuesday despite today’s decline.

The post Why 29Metals, Brainchip, Qantas, and Serko shares are falling appeared first on The Motley Fool Australia.

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More reading

• ‘Nobody is happy’: Why the BrainChip share price is diving 16% on Tuesday
• Qantas share price drops as airline eyes record profit
• Here are the top 10 ASX 200 shares today
• Have I missed the flight on Qantas shares?
• Here are the top 10 ASX 200 shares today

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Serko. The Motley Fool Australia has recommended Serko. 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 Fortescue Metals Group Ltd (ASX: FMG) share price is up 1.1% in early afternoon trade on Tuesday.

Shares in the S&P/ASX 200 Index (ASX: XJO) miner are currently changing hands for $21.78 apiece.

And in the wake of the Group of Seven (G7) meeting in Hiroshima, Japan on Saturday, the longer-term outlook for the Fortescue share price may well have gotten a boost.

What happened at the G7 that could impact the Fortescue share price?

United States President Joe Biden managed a truncated appearance at the G7, before hurrying home to negotiate a new federal debt ceiling.

But in his shortened attendance, Biden managed to make some extraordinary statements in regard to Aussie companies involved in transitioning the world to clean energy.

The US, as you’re likely aware, is working to decrease China’s dominance in this field.

As part of that effort, Biden and Prime Minister Anthony Albanese announced a new Climate, Critical Minerals and Clean Energy Transformation Compact. This runs parallel with the newly minted US$369bn (AU$555 billion) Inflation Reduction Act, much of which is targeted at sustainable energy transformation.

Speaking at the summit, Biden said (quoted by The Australian Financial Review):

We are going to establish climate and energy as the third pillar of the Australia-US alliance. This will enable the expansion and diversification of clean energy supply chains, especially as it relates to critical materials.

Biden also plans to have Australia added as a “domestic source” under the US Defense Production Act. This could be a boon for the Fortescue share price, as it would enable new US investments in some of the miner’s projects, with a particular focus on green hydrogen.

And Germany added some fuel to the green hydrogen fire, as the member nations discussed energy security in the wake of Russia’s invasion of Ukraine.

“We also need some new gas power stations, but they should be built in a way that they can run on green hydrogen later on as well. So it is an investment in the clean future as well,” a German government official said at the summit (quoted by Reuters).

Hydrogen can be separated from oxygen by running electricity through water. For it to be green hydrogen the electricity needs to come from renewable sources.

Now what?

While a lot of big ideas were floated, many of the details remain to be worked out between the US and Australian governments.

But resources minister Madeleine King was unequivocally enthusiastic about the new pact.

“Importantly, it will ensure Australian resources companies can access US capital and benefit from the US Inflation Reduction Act,” share said (quoted by the AFR).

As for any potential tailwinds for the Fortescue share price, Jason Willoughby, CEO of Fortescue founder Andrew Forrest’s private company Squadron Energy, noted that Biden hadn’t specifically mentioned directly subsidising Aussie green hydrogen.

Willoughby said:

We’ll wait to see the detail. But I think the important message here is intent. And if we hadn’t had that message, the risk was that folks would start adjusting their attention to start to move to the US.

By announcing this and showing intent, that means that companies like ours and others can just keep going with their plans in Australia.

Fortescue’s green arm, Fortescue Future Industries (FFI) has five green hydrogen projects currently underway in various nations. Among those, the Gibson Island project in Queensland is the closest to production.

An FFI spokesman (quoted by The Australian) praised the new pact, saying it recognises the “critical importance of green hydrogen”.

And in what could offer a boost to the Fortescue share price down the road, he said the pact will help FFI demonstrate its green energy projects “around the world”.

This all comes just weeks after the Australian government announced $2 billion to fund green hydrogen projects as part of the 2023 federal budget.

Forrest, as you’d expect, applauded that funding.

“It’s a race to win this race,” he said of the global competition to be a leader in green hydrogen production.

Forrest added at the time:

I see the potential in our country of an industry at least the size of Aramco, a multi-trillion-dollar company that underpins the entire economy of Saudi Arabia and that high standard of living which 34 million people have in their country.

As for any long-term tailwinds for the Fortescue share price from the new pact, as Willoughby said, “We’ll wait to see the detail.”

The post Why the Fortescue share price could be a winner following Joe Biden’s extraordinary G7 statements appeared first on The Motley Fool Australia.

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More reading

• ‘The real struggle’: Can an ASX investment in hydrogen really pay off?
• Could this ‘further strengthening’ boost the Fortescue share price moving forward?
• Could Fortescue be the next ASX 200 miner on the lithium M&A trail?
• How does the Fortescue dividend stack up against BHP and Rio?
• Is the Fortescue share price a buy for its 2024 dividend yield?

Bernd Struben 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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ASX 200 lithium stocks Core Lithium Ltd (ASX: CXO) and IGO Ltd (ASX: IGO) have been downgraded by a top broker despite predictions of a resurgence in lithium prices over the next few months.

As we reported last week, there are expectations of a 40% rebound in lithium prices by the end of 2023.

So, what’s happening with these two particular ASX 200 lithium stocks?

ASX 200 lithium stocks get the thumbs down

As reported in The Australian, JPMorgan has downgraded both Core Lithium shares and IGO shares.

The broker has cut its rating on Core Lithium to underweight and cut IGO to neutral with a 12-month share price target of $16.

The IGO share price is currently trading at $14.88. So despite the downgraded rating, JP Morgan anticipates a 7.5% increase in the share price over the next 12 months.

Let’s review what’s been happening with these two ASX 200 lithium stocks.

Core Lithium approves budget for second mine at Finniss

The latest price-sensitive news from Core Lithium was an update about its flagship Finniss Project in the Northern Territory.

The board has approved funding for the early works of the second proposed mine at Finniss, called the BP33 underground project.

The company expects to spend $45 million to $50 million on the box-cut and preliminary site establishment for BP33, with completion by the end of the first quarter of 2024.

That’s when the miner hopes to make a final investment decision on BP33.

IGO sells JV interest and raises stake in ASX metals junior

IGO isn’t just an ASX 200 lithium stock. The company also produces a lot of nickel.

The latest price-sensitive news from IGO related to its 51% joint venture interest in the Kanowna East, Emu Lake, and Fraser South projects in Western Australia.

IGO has signed a binding agreement with gold and nickel explorer Metal Hawk Ltd (ASX: MHK) to sell its JV interest in exchange for an increased shareholding in Metal Hawk from 5.4% to 8.2%.

Lithium prices

The lithium carbonate price has lifted 37% over the past month, according to Trading Economics data.

It currently sits at US$32,342.90.

Citigroup says the price could rise to between US$35,000 and US$40,000 per tonne by the end of 2023.

Macquarie thinks the price could go as high as US$57,500, and UBS is tipping US$54,750 per tonne.

The post 2 ASX 200 lithium stocks just downgraded by a top broker appeared first on The Motley Fool Australia.

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More reading

• Is it time to be a bull or a bear on Core Lithium shares?
• Core Lithium share price could be a long-term winner as critical metals steal the spotlight at G7 summit
• ASX 200 lithium shares could be winners as Biden calls critical clean energy metals the ‘third pillar of the Australia-US alliance’
• Here are the 10 most shorted ASX shares
• 5 things to watch on the ASX 200 on Monday

Motley Fool contributor Bronwyn Allen has positions in Core Lithium. 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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Shares in S&P/ASX 200 Index (ASX: XJO) tech giant TechnologyOne Ltd (ASX: TNE) are outperforming today after the company bolstered its interim dividend.

The $5 billion software-as-a-service (SaaS) provider released its earnings for the first half of financial year 2023 today, as my Fool colleague James covered this morning. Within them, it declared its latest dividend.

Right now, the TechnologyOne share price is lifting 1.89% to trade at $15.61.

For comparison, the S&P/ASX 200 Index (ASX: XJO) is up 0.17% and the S&P/ASX 200 Information Technology Index (ASX: XIJ) has risen 0.4%.

Let’s take a closer look at the dividend TechnologyOne slapped on the table today.

ASX 200 tech share outperforms on bolstered dividend

The TechnologyOne share price is in the green after the company upped its latest dividend by 10%.

The ASX 200 tech stock declared a 4.62 cents per share, fully franked, interim dividend ­– up from the prior comparable period’s 4.2 cents per share, fully franked, offering.

However, the growth might not be so surprising to those paying attention to the company’s financials. It’s grown its interim dividend by 10% every year since financial year 2010.

Those who aren’t invested in the ASX 200 tech share but want a piece of the dividend better act quickly. It will trade ex-dividend next Thursday.

That means anyone who isn’t invested in the stock at next Wednesday’s close will miss out.

It will then begin to land in investors’ accounts from 16 June.

And it wasn’t just TechnologyOne’s dividend that has seemingly caught the eye of the market today.

The company also revealed a 24% jump in post-tax profit to a record $41.3 million. It’s the fourteenth year that the company has delivered a record first-half profit.

Commenting on the results driving the ASX 200 tech share higher, TechnologyOne CEO Edward Chung said:

We have a clear and consistent strategy, and our team are executing very well, delivering significant value for our customers.

TechnologyOne share price snapshot

The last few years have been good for the TechnologyOne share price.

The ASX 200 tech share has gained 21% since the start of 2023. It’s also 52% higher than it was this time last year and a whopping 257% higher than it was this time five years ago.

For comparison, the ASX 200 has climbed 5% year to date, 2% over the last 12 months, and 21% over the last five years.

The post Guess which ASX 200 tech share just hiked its dividend 10% appeared first on The Motley Fool Australia.

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More reading

• TechnologyOne share price charges higher amid strong half-year growth
• 5 things to watch on the ASX 200 on Tuesday
• Analysts say these ASX 200 growth shares are top buys right now
• Top brokers name 3 ASX shares to buy next week
• Analysts name 2 excellent ASX 300 shares to buy and hold

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Technology One. The Motley Fool Australia has recommended Technology One. 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 Wesfarmers Ltd (ASX: WES) share price is down 0.9% as the diversified business faces competition to buy the Silk Laser Australia Ltd (ASX: SLA) business.

Readers may remember that just over a month ago, Wesfarmers announced it was in the process of buying Silk Laser Australia, one of the largest non-surgical aesthetics clinic operators in Australia and New Zealand with a network of more than 140 clinics.

But it seems it’s not a done deal for Wesfarmers.

Competing bid for Silk Laser Australia shares

Silk Laser Australia announced this morning it has received a competing, non-binding, and indicative proposal from EC Healthcare, which claims to be Hong Kong’s largest non-hospital medical service provider.

The bid from EC Healthcare is $3.35 cash per share, which is a 6.3% premium to the offer from Wesfarmers’ Australian Pharmaceutical Industries (API).

The proposal from EC allows Silk to pay a fully franked dividend of up to 10 cents per share, which would reduce the cash consideration offered.

There are a number of conditions attached to the bid including completing confirmatory due diligence, unanimous recommendation from the Silk board, entry into a scheme implementation agreement, and all necessary regulatory approvals being obtained.

Which offer will be accepted?

Silk Australia said that after careful consideration and receiving advice from both its financial and legal advisers, the Silk board decided the EC proposal is the stronger offer. Indeed, this could be influencing the Wesfarmers share price today.

The ASX healthcare share has told Wesfarmers it has until 30 May 2023 to provide a proposal response. The Silk Laser Australia board will then decide which offer is the strongest.

Silk Laser Australia’s board said shareholders don’t need to take any action at this time. It will provide relevant updates to shareholders about any further offers from API.

It also noted there is no certainty the engagement between either Silk or EC Healthcare will result in a change of control transaction of an offer capable of acceptance by Silk shareholders.

What does this mean for the Wesfarmers share price?

The Silk Laser Australia business has a market capitalisation of around $160 million, whereas Wesfarmers has a market capitalisation of $58 billion. As such, it’s a relatively small deal for Wesfarmers, whether it goes ahead or not.

If it’s successful, it will bolster Wesfarmers’ healthcare division and deliver it more earnings. We’ll have to see what happens next in the fight for Silk.

The post Wesfarmers share price drops as Silk takeover competition heats up appeared first on The Motley Fool Australia.

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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 positions in and has recommended Wesfarmers. The Motley Fool Australia has recommended Silk Laser Australia. 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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After a nice rebound in recent sessions, the Brainchip Holdings Ltd (ASX: BRN) share price is crashing down to earth again on Tuesday.

In morning trade, the struggling semiconductor company’s shares fell as much as 16% to 42.7 cents.

Why is the Brainchip share price crashing?

Investors have been hitting the sell button this morning after Brainchip released its annual general meeting presentation and speeches.

The latter includes a few choice statements that don’t paint a very positive picture of how things are going for the meme stock.

Brainchip Chairman, Antonio J. Viana, acknowledged that the company’s sales performance was abject and its failure with the hyped-up Akida 1.0 product was largely to blame. He commented:

Let me be clear, nobody at BrainChip is happy or content with our current position. We haven’t hit any significant stride yet with respect to revenue. No one is satisfied, and no one should be.

The trick for many companies comes when the move from technology to product takes place. In the past, BrainChip frankly hasn’t gotten this right. We haven’t had a product that can see its way into end production systems.

The company’s under fire CEO, Sean Hehir, adds:

As we engaged with prospects in the first half of the year, we heard consistent feedback from virtually all engagements, which was while Akida 1.0 was, and is, at leadership levels of performance and power, the addressable number of uses cases was arguably narrow and targeted in places where existing “good enough” solutions were already in place. We simply were not going to be successful with the Version 1 product.

What’s next?

Much like they did with version 1, management has hailed version 2 as the key to its future success. Hehir said:

Fundamentally, Akida 2.0 is a platform that substantially increases the capacity of fan-less, highly efficient devices at the edge to run complex models and networks. We can now supercharge the edge AI device to efficiently run complex AI computation, untethered from the cloud, and without CPU intervention, and reduced system load.

Though, it is worth remembering that there certainly is a lot riding on this new platform and nothing to say that it won’t be another failure and destroy even more shareholder wealth. Especially given the competition it faces in the industry.

Finally, it isn’t known yet if disgruntled shareholders have dealt Brainchip’s renumeration report a strike. Management has attempted to justify its generous payouts, but we will soon find out if that has been enough to pacify shareholders.

The post ‘Nobody is happy’: Why the BrainChip share price is diving 16% on Tuesday 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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