Not long ago, mobile tracking and ad serving company Phunware (NASDAQ:PHUN) got a big bump on Wall Street. Legions of traders quickly bought up shares of PHUN stock. But, was this buying activity based on known facts, or rumors?
Apparently, mostly the latter. Phunware got caught up in a speculative frenzy related to the announced special purpose acquisition company (SPAC) plans for former President Donald Trump’s Trump Media & Technology Group (TMTG) venture.
Due to rumors that Phunware would provide services to TMTG and its planned Truth Social platform, traders bid up PHUN stock. However, that buzz appears to be fading now.
So, can we find another reason to consider an investment in Phunware? The answer is yes — and to get the details, we can look to the decentralized-asset revolution that’s already in progress.
A Closer Look at PHUN Stock
Before the rumor mill got worked up about the potential future TMTG connection, PHUN stock was trading near $1.
Then, on Oct. 22, the share price spiked to a high of $24.04 as the rumor mill kicked into overdrive. The news spread that the Trump-Pence 2020 Reelection Campaign may have been a client of Phunware. And thus, as the rumors went, they are probably involved with TMTG’s new soon-to-launch Truth Social platform.
Yet, as I alluded to earlier, though, there’s no concrete confirmation of any of these rumors, particularly of the latter one.
So, you may have heard the old saying, “Buy the rumor, sell the news.” Well, PHUN stock definitely sold on the news — or the lack thereof, to be more accurate.
By the end of October, the rumors had faded and the stock was already down to $4 and change. Checking in on Dec. 1, it was down just below $3 at $2.95.
Now, the remaining shareholders have to regroup and re-assess the situation with Phunware. Is it truly hopeless?
Stacking Those Digital Coins
If we can ignore the rumor mill and focus on the company itself, we’ll find that Phunware is a promising blockchain-centered business.
For example, through its Lyte Technology unit, Phunware sells high-performance computers tailored towards crypto miners and traders.
Even beyond that, Phunware has been amassing an impressive Bitcoin (CCC:BTC-USD) hoard. As of Nov. 4, Phunware’s Bitcoin holdings were already up to roughly 127 BTC, after a recent purchase of 100 BTC. That was just the beginning, though. By Nov. 22, Phunware had expanded its Bitcoin holdings through a 398-Bitcoin purchase.
With that, Phunware held a total of approximately 529 BTC. Reportedly, those Bitcoins were acquired at an aggregate purchase price of around $31.8 million.
This isn’t to suggest that PHUN stock is merely a substitute for owning Bitcoin. With Phunware, you’re investing in a business, not a coin.
Still, it’s important to understand that Phunware’s business is closely tied to cryptocurrency — not a bad thing if you believe in the future of crypto.
A New Coin to Consider
Even beyond the company’s rapidly growing Bitcoin collection, Phunware is getting deeper into the crypto game with the launch of a new token.
Known as PhunCoin, it’s described as a “security token that is empowering consumers to take control of and be compensated for their data.” Apparently, with PhunCoin, the users can monetize their digital identities by sharing data with brands (assuming they’re comfortable with doing that). For instance, the users can earn PhunCoin by providing answers to questions in a survey.
Furthermore, the token’s holders can invest in the value of Phunware’s blockchain-enabled data exchange and receive a PhunCoin “dividend.”
Phunware President, CEO and co-founder Alan S. Knitowski emphasized that PhunCoin has the potential to empower its users: “PhunCoin is an important first step towards ensuring consumers not only control their data, but also are compensated fairly when their data is purchased by brands.”
The Bottom Line
PHUN stock generated buzz based on speculation.
With the buzz abating, and the rumor mill cooling off, it’s time to give Phunware another assessment. This time one based on verified reports and evidence instead of rumors.
Fortunately, there are reasons to invest in Phunware, especially if you’re bullish on Bitcoin as well as unique and interesting altcoins, such as PhunCoin. For those keen on crypto, PHUN stock can be an exciting opportunity.
On Low-Capitalization and Low-Volume Cryptocurrencies: InvestorPlace does not regularly publish commentary about cryptocurrencies that have a market capitalization less than $100 million or trade with volume less than $100,000 each day. That’s because these “penny cryptos” are frequently the playground for scam artists and market manipulators. When we do publish commentary on a low-volume crypto that may be affected by our commentary, we ask that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.
Read More: How to Avoid Popular Cryptocurrency Scams
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.