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BrainChip Holdings (ASX:BRN) - President & CEO, Louis DiNardo - The Market Herald
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  • A solid green run cemented BrainChip's (BRN) status as the next tech unicorn this week
  • The technology stock has surprised bullish investors and analysts alike since the start of September as its share price soared to new heights amid major tech corrections to the west
  • Over the course of just seven trading days, the company's share price more than doubled to close at an all-time high of 75.5 cents — at one stage, the stock was worth as much as 97 cents per share
  • Investors who put their money behind BrainChip this time last year would have seen a staggering 1400 per cent return on their investment
  • While BrainChip's half-year financials came out right before the green wave began, it's likely the rise was triggered by a collaboration with VORAGO Technologies
  • So, as the local sharemarket dusts off fresh losses and looks to the new week ahead, the question remains; is the BrainChip boom here to stay?

A solid green run cemented BrainChip's (BRN) status as the next tech unicorn this week.

The technology stock has surprised bullish investors and analysts alike since the start of September as its share price soared to new heights amid major tech corrections to the west.

So, as the local sharemarket dusts off fresh losses and looks to the new week ahead, the question remains; is the BrainChip boom here to stay?

September surge

While today's red wave hit BrainChip's share price, dragging it back to trade just shy of 64.5 per cent, it couldn't hold a candle to the stock's September gains.

And what a month it's been. When spring hit the local market, BrainChip shares were worth 31 cents each. Over the course of just seven trading days, the company's share price more than doubled to close at an all-time high of 75.5 cents. At one stage, the stock was worth as much as 97 cents per share.

Investors who put their money behind BrainChip this time last year would have seen a staggering 1400 per cent return on their investment. The now-billion dollar stock will join the S&P/ASX's All Technology Index on September 21, and now, as one of the largest 300 stocks on the exchange, it could move to other indexes as well.

But do BrainChip's financial's support the company's move from a small-cap stock to a billion-dollar lister?

Finances falter

In late August, BrainChip released its latest half-year report. While the results came out right before the company's green run began, it's hard to pick how they contributed to the increases in its share price.

In fact, on the day the results were posted, BRN shares dropped from 32.5 cents each to close worth 30 cents on August 26.

Compared to 2019's half-year, BRN's revenue slid 80 per cent to just US$13,397 (roughly A$18,000). In addition, the company's net loss blew out 53 per cent to hit US$6.85 million (roughly A$9.5 million).

Over the period, BrainChip also went cashflow-negative by $5.14 million and had just $5.35 million in the bank on June 30. It could be a sign the company will need to tap investors for fresh capital in the future as it works to monetize its Akida brain chip next year.

As a result, if the financials are less likely to have triggered BrainChip's green wave, what is behind the spike?

Akida agreement

On September 2, BrainChip announced it would collaborate with VORAGO Technologies to support a NASA program to develop a neuromorphic processor which meets spaceflight requirements.

"The combination of benefits from the Akida neuromorphic processor and a radiation-hardened process brings significant new capabilities to spaceflight and aerospace applications," BrainChip CEO Louis DiNardo said.

"We are thrilled and honoured to partner with BrainChip to harness the radiation hardening capabilities of our patented HARDSIL technology for the phase one program with NASA," VORAGO CEO Bernd Lienhard added.

The announcement lead to a huge spike in the stock's value, piling a whopping $936 million onto its market capitalisation. But the surge is even more incredible in the context of the current market.

Tech in trouble

Perhaps what makes BrainChip's surge even more remarkable is the stock's success against tech stocks' widespread corrections.

Nasdaq-listed I.T. giants met their match this month as strong gains rebounded into deep red sessions. Mobile major Apple's shares fell 16, Microsoft dropped 12.5 per cent, Google's parent company Alphabet shed 11 per cent and video communications software Zoom lost 23 per cent.

The sudden falter was felt across the world as international exchanges struggled to reach the green. While a brief respite on Wall Street over Labour Day gave way to a momentary rebound, the local market plummeted again today to a ten-week low.

Tech stocks big and small couldn't escape the losses, with the information technology index shedding roughly 150 points since the start of September.

Instead, BrainChip bucked the trend and surged on the new Akida partnership, rising to a billion-dollar valuation in less than 10 trading days.

As another week of trading comes to an end, only time will tell if BrainChip can surge against the sector stream, or stumble in a further correction.

BRN by the numbers
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