Weebit Share Price Falls on FY21 Results (ASX:WBT)

The Weebit Nano Ltd’s [ASX:WBT] share price after reporting an FY21 net loss of $11.3 million.

At time of writing, WBT shares were down 5%, trading for $2.61 a share.

ASX WBT - Weebit Share Price ChartSource: Tradingview.com

However, zooming out reveals the WBT share price has gained 370% over the past 12 months.

Let’s examine Weebit’s full-year results further.

WBT FY21 highlights

As mentioned earlier, Weebit reported a net loss totalling $11,259,240. The loss in FY20 stood at $4 million.

So, WBT’s losses widened this year.

Why? Did the company invest heavily in its growth in FY21?

As a pre-revenue company, Weebit is focusing on research and development right now.

In that regard, WBT’s R&D expenses rose from $154,338 in FY20 to $5.3 million in FY21.

Additionally, the company recorded net cash outflows from operating activities increased of $7,048,400. This was up from $1,986,691 in FY20.

The jump was largely attributed to a significant rise in payments to suppliers and employees.

Despite the net loss and net operating cash outflows, Weebit did end the year with $21.7 million in cash and cash equivalents, up from $4.1 million the prior year.

This was mostly due to financing activities which saw $21.9 million come in through proceeds of share issues and a further $4.5 million from options exercise proceeds.

 For reference, in November 2020, Weebit completed an oversubscribed $15 million placement and share purchase plan (SPP).

An additional $2.5 million in cash was added following shareholder approval of the June placement and SPP.

Proceeds from the exercise of listed options raised an additional $3.5 million over the year.

WBT share price outlook

What should the market make of today’s results?

For one, the company is clearly investing heavily in its technology, significantly ramping up its R&D expenditure in FY21.

It also spent more on marketing as it seeks to establish its brand in advance of commericialisation.

The widening net losses and operating cash outflows were offset by capital raisings throughout the year.

But with more than $6.5 million spent on R&D and marketing, along with a $7 million net loss from operating activities, investors will likely keep an eye on WBT’s cash position.

Will R&D and marketing costs grow in FY22?

As Weebit nears commercialisation, it’s likely they will. It will be interesting to see if the tech firm will tap the market for more funds in FY22.

For now, the company said its capital position is helping pace-up its technical activities, including the transfer to a production fab, initiating the shift to 300mm/28nm technology in the embedded memory market, and developing the next-gen of the neuromorphic demo.

For optimistic shareholders, the bottom line here is that Weebit is investing heavily in the short-term to set itself up for the long game.

Weebit said it expects to have its first test chips with the embedded ReRAM module finish the manufacturing process in late 2021.

And it expects functional testing results in the first quarter of 2022 with qualification to follow in mid-2022.

Now, if you are interested in stocks like WBT that are aiming to develop a new idea and disrupt existing industries, then I suggest reading the latest report from our market analyst Murray Dawes.

In the report, Murray profiles seven Aussie small-cap stocks he’s researched that he believes possess exciting potential.

Regards,

 Kiryll Prakapenka,

 For Money Morning

PS: Our publication Money Morning is a fantastic place to start on your investment journey. We talk about the big trends driving the most innovative stocks on the ASX. Learn all about it here


Kiryll Prakapenka is an investing autodidact who is passionate about conducting in-depth research on investments. Kiryll brings sound analytical skills to his work, courtesy of his Philosophy degree from The University of Melbourne. A student of legendary investors and their strategies, Kiryll likes to synthesise macroeconomic narratives with a keen understanding of the fundamentals behind companies.


Money Morning Australia