Phunware (NASDAQ: PHUN) stock price surged hard this week as investors cheered key developments in the United States. It surged by more than 50% on Monday and is already up by 25% in the premarket session. It has soared to $16, which is much higher from the YTD low of $3.60.
Why Phunware shares surgedPhunware share price went parabolic in an extremely high-volume environment. Data compiled by Yahoo Finance shows that its daily volume on Monday surged to over 64 million. In contrast, the volume stood at 977k, 1 million, and 1.28 million on Wednesday, Thursday, and Friday, respectively.
This rally happened a few days after the company implemented a 1:50 reverse stock split in a bid to maintain its Nasdaq listing.
There are three possible reasons why PHUN stock has surged. First, the rally happened on the same day that Donald Trump won an important case at the Supreme Court. The ruling means that he will be on the presidential ballot in all states.
Several states like Colorado and Maine had removed Trump from the ballot citing his role in January 6’s demonstrations. Still, this ruling was in line with what most legal scholars believed would happen.
Phunware will likely not benefit directly from Trump’s presidency. However, the stock is doing well since the company participated in his last campaign as a web and app developer.
Second, Phunware stock jumped after the SEC agreed to the merger of Trump Media company to merge with Truth Social, in a deal that will value it at $10 billion. As a result, DWAC stock surged by over 18% after the news. Phunware tends to do well when stocks associated with Trump are rising.
A $10 billion valuation for Truth Social seems stretched because the company is still making substantial losses and has struggled to gain wide market share. Also, it means that it has half the valuation of X, formerly known as Twitter.
Third, PHUN stock surged after the company confirmed that it will publish its financial results on Tuesday next week. Analysts expect that Phunware’s revenue will come in at $2.1 million down from $2.7 million in Q3 and $4.7 million in the same quarter in 2022.
Is PHUN stock a good buy?
PHUN stock chart by TradingView
The daily chart shows that the PHUN share price bottomed at $3.28 in January. It then rebounded as it became a popular name among day traders. It has now climbed above all moving averages while the Average True Range (ATR) has risen, pointing to higher volatility.
Therefore, the stock will likely remain being volatile in the coming days. This could see it retest the psychological point of $20 and then resume the downward trend. What is clear, however, is that Phunware is ideal as a day trading stock and not as a long-term investment.
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