If only you'd invested $1000 in Amazon 20 years ago! Such nauseating platitudes are ubiquitous clickbait, that generally fail to mention the overwhelming disparity in fledgling small caps that become nothing more than never-ending money pits. Frustrating pursuits requiring relentless capital raises that fund obscene salaries of expert marketers that know how to over-promise and under-deliver. These companies get investors excited with vague collaborations or Memorandums of Understanding (MOUs) with big names that have stock market forums breaking the internet.
Often these stocks go on a wild ride, with some investors and traders alike, reaping delightful multi-bag windfalls... while those on the wrong side of the hype, see just how quickly the stock market can burn you.
Brainchip has had one such wild ride in 2020. The company is promising to produce computer chips that mimic the workings of the human brain. "Neuromorphic chips" can process data much faster and more efficiently than traditional computer processors. The advantages of which, make them suitable for thousands of applications that would require vast amounts of information processed locally. Potential applications include super-fast processing of pedestrian detection in cars.
Brainchip's history goes back to 2015, beginning as a reverse takeover. Although with multiple capital raises, its stock price had periods of sporadic excitement over a couple of years, before interest waned, and then for almost another two years, Brainchip was trading under 10 cents. Since June this year, a stream of positive news has driven recent attention, including several big-name collaborations and the promise of commercialisation coming soon.
Two auto manufacturers, including Valeo in Europe and another unnamed partner in Detroit, announced evaluation and development agreements. Shortly followed by a partnership with Magik Eye Inc, to market a breakthrough solution for object detection, object classification and gesture recognition.
Although it was the announcement of a collaboration with US-based Vorago Technologies for a Phase 1 NASA project that meets spaceflight requirements, that sent the share rocketing (pun intended) to an intraday high of 97 cents, valuing the company at $1.5 billion. A little over a week later, enthusiasm tempered and the stock has since been hovering back in the 30's and 40's.
There is little doubt Brainchip's potential is enormous. Whether they can deliver remains to be seen. Although having already caught the attention of mainstream media, many will be watching to see if it becomes more than an unproven, speculative stock.