Why is this ASX tech stock dropping 28% on Thursday?

November 30, 2023 07:45 AM AEDT | By Team Kalkine Media

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Why is this ASX tech stock dropping 28% on Thursday? — Image source: shutterstock.com

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ASX tech stock 4DS Memory Ltd (ASX: 4DS) is experiencing a significant downturn on Thursday, with shares plummeting by 28% to 7.6 cents in morning trade. The sharp decline follows the release of a company update after the market close on Wednesday, leaving investors disappointed about the timeline for revenue generation.

Earlier this year, 4DS Memory, a company in the ASX tech stocks sector, unveiled successful results with its fourth platform lot, positioning itself favorably in the memory space targeting technology closer to DRAM. Many investors interpreted this achievement as a positive sign, indicating that commercialization might be imminent. However, the latest update from the company suggests that there will be an additional year of product development and testing before revenue generation begins. This development underscores the dynamic nature of the technology sector and the timeline uncertainties that can impact ASX-listed tech stocks.

The company's fifth and sixth platform lots will be manufactured on Imec's Dory platform on 60nm and 20nm memory cells. Manufacturing is scheduled to commence in the first and second quarters of 2024, with delivery expected in the third quarter. The fifth platform lot aims to optimize the unique characteristics observed on the 60nm memory cells before progressing to manufacturing on 20nm memory cells.

David McAuliffe, the executive chair of 4DS, emphasized the company's commitment to addressing challenges in the growing computing landscape. He stated, "With a strong balance sheet and a much-reduced dependency on raising additional capital, unless it was a strategic placement, the Board is of the view that this increased investment at Imec is in the best interests of shareholders to potentially maximize the opportunity to further position 4DS as a unique technology to address gaps in the market."

Investors have responded to the delayed revenue expectations by selling down 4DS Memory shares, contributing to the 28% decline observed in morning trade. As the company navigates the evolving tech landscape and pursues further technological advancements, shareholders will be closely monitoring future updates and developments.

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