As you may recall, Phunware (NASDAQ:PHUN) last month got caught up in a speculative frenzy related to the announced SPAC (special purpose acquisition company) plans for former President Donald Trump’s Trump Media & Technology Group (TMTG) venture. Due to rumors the company will provide services to TMTG and its planned Truth Social platform, traders bid up PHUN stock. In the process, sending it from $1.53 per share at the close to Oct. 21, to as much as $24.04 per share the following day.
After climbing more than 15x in the blink of an eye, shares began to fall back, closing at $8.74 per share. Since then, as the rumors of a Trump connection to Phunware have still not been confirmed, traders have made their exit. The stock today has fallen more than 83%, to around $4 per share today.
So, following its wild ride, and subsequent slide, why should you give this stock any consideration?
Yes, PHUN may quack like a meme stock, and walk like a meme stock. But this company has more on its side than just flash-in-the-pan popularity on Reddit. Dive into the details, and you’ll see there’s quite a bit of potential with this company. With both its mobile tracking/ad servicing business, as well as its blockchain/crypto ventures, there’s more than just memes here.
With it pulling back in price, as the meme and Trump-related buzz takes a breather, investors looking for risky, but intriguing plays may want to give it a closer look.
A Closer Look at PHUN Stock
The Trump-Pence 2020 Reelection Campaign may have been a client of Phunware. But like I mentioned above, nothing’s come out to confirm that this company will be providing any services for the former President’s soon-to-launch social media platform.
That’s bad news for traders who got into PHUN stock when it spiked on Oct. 22, and are now sitting on heavy losses. However, consider taking a look at it today, as a serious investment and not as just a “meme play.” If we do that, then, even without the rumored Trump catalyst, there’s plenty going on here that may pique your interest.
For example, there’s a blockchain/crypto angle with the company. Punware holds around $8 million in Bitcoin (CCC:BTC-USD) for investment purposes. And, through its Lyte Technology unit, sells high-performance computers tailored towards crypto miners and traders. To top it all off, it operates its own blockchain ecosystem, via its Phuntoken utility token, and Phuncoin security token.
That’s not to say its main business isn’t itself interesting.
Recent Earnings Show High Growth Potential
Just a few days back, Phunware released its results for the quarter ending Sep. 30. During the period, revenue soared 50% on a sequential (quarter-over-quarter) basis, to $2.2 million. Mainly, due to the continued success of its Multiscreen-as-a-Service (MaaS) platform. For the quarter, this flagship mobile tracking/ad servicing unit accounted for around 81.8% of its overall sales.
Sure, just a few million in quarterly revenue may not sound impressive. Especially given PHUN stock has a $332.5 million market capitalization. But as InvestorPlace’s Mark Hake recently argued, with the $66 million it has in its coffers, it has the capital it needs to scale up this business.
Added to this is the fact that, despite its small size, it’s managed to attract and retain high-profile clients. Not just short-term ones like Trump’s 2020 Reelection Campaign. Phunware has had, and continues to have, many well-known names as clients.
Considering both these factors, it’s not out of the question for this business to continue growing at a healthy clip.
The same too can be said about its blockchain/crypto endeavors. As Web 3.0 trends continue, this unit stands to benefit. Especially if the company decides to use some of its relatively high cash position, to make some more bolt-on acquisitions.
The Verdict on PHUN Stock
Phunware may not be in the running to land a contract with the former President’s new social media platform. But between its fast-growing MaaS business, and its blockchain sideline, this is an interesting situation, with a lot of potential. It’s shortsighted to pass on it, due to its meme reputation.
Coming in with a “B” rating in Portfolio Grader, I’ll admit this isn’t a stock for everyone. Just coming off what some would refer to as a “meme rally,” further volatility should be expected.
Nevertheless, if you’ve done your homework, and can separate the facts from the hype? Depending on your risk appetite, PHUN stock could be worthwhile as a speculative play.
On the date of publication, Louis Navellier did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
On the date of publication, the InvestorPlace Research Staff member primarily responsible for this article held a LONG position in Bitcoin. They did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
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