Why Phunware Stock Soared Today

What happened

Phunware (NASDAQ:PHUN) weathered the broader market turmoil to post big gains in Tuesday’s trading. The stock ended the daily trading session up about 12.5%. During this time, the S&P500 the index fell about 1.8%.

There doesn’t appear to be any new company-specific news behind Phunware’s rise, but Tuesday was a day of big gains for stocks associated with former President Donald Trump. Acquisition of the digital world (NASDAQ:DWAC), which is set to merge with Trump Media & Technology, closed the session up around 21.8%. Investors can bet on a connection between companies.

Image source: Getty Images.

So what

Phunware created the mobile app for Trump’s 2020 presidential campaign and also provided data and social media services. With Trump Media & Technology Group seemingly on track to launch its Truth Social app on Feb. 21, investors are hoping Phunware has secured the social media company as a client.

Despite no public indication that Truth Social will use Phunware’s services, the software company’s shares have often surged in conjunction with gains from Digital World Acquisition. In addition to the growing excitement surrounding the social platform, it’s also possible that a recent rally hosted by Trump in Arizona could be seen as an indicator that he will run for president in 2024.

Now what

After today’s double-digit price surge, Phunware now has a market capitalization of around $312 million. If the company provides key services to Trump Media & Technology Group or the former president’s upcoming campaign, its valuation could continue to soar.

On the other hand, it is still unclear if Trump Media & Technology Group is a client or if Trump will run in 2024. It should be noted that Truth Social is built on open source code from Mastodon, a platform form of social media similar to Twitter, which could potentially indicate a more limited opportunity for Phunware.

In addition to its software business, Phunware also acquired Bitcoin. This could help boost the company’s valuation if the market-leading cryptocurrency enters another strong bull run, but it also adds another source of potential volatility.

With much uncertainty surrounding the company’s outlook, it’s hard to say where the Phunware stock is headed next. The shares could rise if the software specialist gets more business from Trump Media & Technology or other clients, but that looks like a high-risk investment at this stage of the game.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end consulting service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.

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