Phunware (NASDAQ:PHUN) stock combines many of my least favorite things.
These include blockchain, cryptocurrency, SPACs, and penny stock speculation. Add Donald Trump to the mix and this is not going to be a bullish call.
Phunware began life as a mobile ad tracking company. Then it discovered Bitcoin (CCC:BTC-USD). It began selling computers designed for use by crypto miners and traders. It bought a bunch of Bitcoin. It even launched its own cryptocurrency , known as the PhunCoin.
Where does Donald Trump enter the story? Glad you asked.
The Trump Pump
Trump has been working through a company called Digital World Acquisition (NASDAQ:DWAC) to take his online business public. That operation is called Trump Media & Technology Group.
The Trump-DWAC deal was originally announced in October. That is when PHUN peaked. There was a second effort to pump it up on Dec. 2. Reuters reported that Trump planned to raise $1 billion through hedge funds and family offices for the deal. DWAC was selling for $10 at the time. The news sent DWAC as high as $55.
What does this have to do with Phunware? Phunware, it seems had helped develop the official Trump App during the 2020 campaign. At one time, speculators assumed that Phunware would be involved in the new DWAC app, which runs like a Twitter (NYSE:TWTR) feed. (Trump was kicked off Twitter after the Jan. 6 insurrection.)
The big rumor driving the stock was that the Trump re-election effort may have been a client of Phunware. Shares that were trading at $1 quickly shot up to $8.75 each.
There’s just one problem. As our William White reported, there are no definitive ties between Phunware and DWAC. This was entirely a sympathy play, made possible by the low price of Phunware stock. Phunware trades now for about $3.
PhunCoins
For those who got in on the Phun early, you’re still sitting on some fat profits.
Those profits come from its Bitcoin hoard, including a 398-coin purchase that Phunware announced itself. The coins were recently valued at $31.8 million. Phunware’s market cap at this writing is $287 million.
There’s also the PhunCoin. The PhunCoin lets users monetize their digital identities, earning coins by answering surveys from brands. Phunware is pushing companies to join its Phunware Launch Alliance, buying credits to access the Phunware data Phunware is available through a Phunware wallet and trades through Securitize, which is registered by the SEC.
But wait, there’s more. The company has put its enabling technology, called Multiscreen as a Service, on the AWS Marketplace, which offers apps running on Amazon’s (NASDAQ:AMZN) Amazon Web Services platform. In its release Phunware calls itself a fully integrated enterprise cloud platform for mobile.
The Bottom Line on PHUN Stock
I take a lot of criticism here for dismissing the concepts contained in Phunware’s business model.
I don’t trust Bitcoin. I don’t trust selling your data for money, real or otherwise. I don’t understand why any serious brand would think surveys of Bitcoin lovers would be honest. I should also add that I’m a Democrat.
Despite this, I understand the attraction. If you bought in on the Phunware hype in October , when it was all about PhunCoins and Multiscreen as a Service, then sold on Dec. 2 after the Trump rumors came and went, you made money.
But in all these cases involving rumors and hype, you need to act fast. There was excitement over Phunware in February, which died off within weeks. The big excitement over the Trump rumors came and went in a day.
There’s action in Phunware. It’s just not my kind of fun.
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Read More: Penny Stocks — How to Profit Without Getting Scammed
On the date of publication, Dana Blankenhorn held a long position in AMZN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Dana Blankenhorn has been a financial and technology journalist since 1978. Just in time for the holidays he has a collection of COVID-19 stories at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or tweet him at @danablankenhorn. He writes a Substack newsletter, Facing the Future, which covers technology, markets, and politics.
