One of many low-priced, risky stocks that have moved lower, Phunware (NASDAQ:PHUN) may be a more interesting situation than it appears at first glance. Sure, you may recall when PHUN stock soared in price last year.
Possibly, due to a rumored Trump connection that failed to be proved true. Another potential driver of its big run up may have been an attempt to drive a short-squeeze. However, no matter the root cause, I wouldn’t hold the fact the stock briefly experienced a short-lived bubble against it. There may be potential with the company’s main business. Along with this, its move into cryptocurrencies is another area of note.
Based on its small size, and speculative nature, more risk-averse investors may want to stay away from it. Chances are, it’ll continue to trade wildly, as new developments (good and bad) result in outsized moves.
But if you’re looking for such plays? You may want to add this stock, which gets a “B” rating in my Portfolio Grader, to your watchlist.
The Latest With PHUN Stock
Despite its big plunge in November, and its slide in December, Phunware shares continue to move lower. Since the start of the year, like with other low-priced, risky plays, investors have continued to move out of it.
The two main “angles” with PHUN stock, which are its rumored Trump connection, as well as is short-squeeze potential, are no longer in play. Assuming no more comes out about it from the rumor mill, it’ll need company-specific developments to move higher.
Fortunately, such developments could arise. Either from its main segment, or from its secondary segment (more below). First, let’s explore the situation with its main mobile tracking and ad serving segment. Back in November, I talked about how this unit was experiencing impressive rates of sequential growth. The company has shown in the past a knack for obtaining (and holding onto) clients across a wide variety of clients.
This could continue. Especially after its recently announced partnership deal with PrimusTech. Partnering with the Singapore-based digital transformation services provider, in order to provide its clients with mobile-related solutions, Phunware has big potential to further grow its client base.
Phunware’s Blockchain/Crypto Angle
After looking at its main business, let’s dive into its equally interesting sideline. When I said its two prior “angles” are no longer in the picture, what I didn’t say is that there’s still a big angle in play with PHUN stock. It’s no secret that the company has exposure to the blockchain/crypto trend.
However, unlike its first two angles, which have fizzled out, this one is still in play. It also has far more substance to it than the Trump and short-squeeze angles ever did. Phunware has been highly active in the blockchain space. In fact, it has created a dual-token ecosystem. This ecosystem consists of its Phuntoken utility token, and its Phuncoin security token.
Along with this is one thing that gives it indirect exposure, and another thing that gives it direct exposure to Bitcoin. Regarding indirect exposure, the company, through a unit it acquired last year (Lyte Technology), makes high-performance computers used for mining cryptocurrencies like BTC-USD. As for its direct exposure?
Phunware has put a lot of the cash on its balance sheet into Bitcoin (CCC:BTC-USD).
Following its last announced purchase in December, the company holds 630 Bitcoins in its coffers. At today’s prices, this position alone is worth about $24.2 million. That’s a moderately high chunk of change relative to its current market capitalization of around $201 million. Not only does this notable holding play into the crypto angle with the stock. You could also consider it a catalyst unto itself, as any big move in BTC-USD could result in a big move for shares.
The Takeaway With PHUN Stock
Following its impressive run last October, and its continued slide since then, many may see this as a meme play that’s had its day. Yet even from a high level view of its underlying business, you can see there’s more than that going on here.
Its revenues are growing at an impressive clip. Per analyst projections, it could see its top-line jump this year, from around $10.3 million, to nearly $25 million. With its main business taking off, and with the high potential from its move into the blockchain/crypto space, a Phunware rebound isn’t dependent on it once again becoming popular with the meme crowd.
That said, PHUN stock isn’t a play for the risk-averse. Even if you can stomach its high volatility, you may want to dig a little deeper before buying. But based on what you can see on the surface, it may just well be a very promising opportunity for risk-tolerant investors.
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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