BrainChip Holdings Ltd (ASX: BRN) shares have had a rough time these past 12 months.
Whilst the S&P/ASX 200 Index (ASX: XJO) has climbed nearly 8% in that time – even after its recent sell-off – BrainChip shares are down 53%.
They now trade at 17.8 cents apiece at the time of writing, down a further 5% in the past week.
As BrainChip shares have struggled, many investors are no doubt asking: What went wrong?
Image source: Getty Images
BrainChip shares dip on company financials
As a reminder, the company specialises in neuromorphic computing, a technology that mimics the human brain's processing power. Despite its innovative potential, the technology hasn't yet been widely adopted.
In its most recent quarterly update, the company reported it ended the period with around US$11 million in cash on its balance sheet.
This is down from approximately $13 million the quarter prior.
Cash inflows from customer receipts were also lower at US$50,000 versus US$90,000 in the three months prior.
Whereas net outflows reduced slightly to nearly US$4 million.
Adding to the pressure, as my colleague Bernd reported earlier in the year, BrainChip hasn't yet secured major royalty agreements for its Akida technology, which was expected to be a game-changer in the AI space.
Prior to this, it had reported deep losses in its FY23 results, with revenues down 95% year over year.
BrainChip shares also sold off heavily in February after the excitement surrounding artificial intelligence (AI) stocks began to settle.
Reaction to capital raising
In a bid to bolster its financial position, BrainChip announced a $25 million capital raising. It will raise the funds via two vehicles, including a fully underwritten institutional placement and a share purchase plan (SPP) for retail investors.
These new shares were offered at 19.3 cents each, a slight discount on the trading price at the time.
While the capital raising aims to fund the commercialisation of BrainChip's Akida 2.0 technology and develop its new TENNs product, it has also led to dilution for existing shareholders.
Investors have continued to sell BrainChip shares in the weeks following that announcement.
Where to next for BrainChip shares?
Looking ahead, BrainChip faces a challenging road.
The company's CEO, Sean Hehir, remains optimistic about ongoing licensing discussions and potential sales in the audio and microcontroller segments.
Hehir also said the company is constructive on "the number of active engagements and level of interest" from its customers.
But analysts are cautious. Peak Asset Management recently recommended a sell on BrainChip shares, citing its financials and high cash outflows as reasons why.
Time will tell what's in store for the tech company.
Foolish takeaway
BrainChip has had a tumultuous year, with its share price halving over the last 12 months.
Investors continue to sell the stock in August, with shares down from previous highs of 20.5 cents apiece on July 29.
