Phunware (PHUN) Stock: Why The Price Is Surging Today

By Amit Chowdhry ● Dec 2, 2021
  • The stock price of Phunware Inc (NASDAQ: PHUN) increased by over 25% pre-market today. This is why it happened.

The stock price of Phunware Inc (NASDAQ: PHUN) increased by over 25% pre-market today. Investors are responding positively to a Reuters report that the new social media venture being overseen by former President Donald Trump is looking to raise up to $1 billion selling shares to hedge funds and family offices at several times the valuation it landed with Digital World Acquisition Corp (NASDAQ: DWAC) in October.

The Trump Media & Technology Group — which is in the process of developing a social media app — would already raise $293 million if the deal listed through a merger with Digital World Acquisition is completed. The deal had valued Trump Media at $875 million including debt. And now Trump Media is looking to raise up to $1 billion at a valuation closer to $3 billion. This would reflect the rally in Digital World after Trump supporters and day traders bought up stock in Digital World Acquisition.

Digital World Acquisition was trading at about $10 before the partnership with Trump Media & Technology Group was announced. And it closed at $44.35 in the most recent trading session and is now more than $55 pre-market today.

Many private investment in public equity (PIPE) deals are signed before a deal to take a company public occurs and it is not guaranteed that the companies will raise the $1 billion being seeded. Trump Media and Digital World reportedly asked investors to finalize their commitments to the PIPE by the middle of this month. During a PIPE roadshow attended by one of Reuters’ sources, investors were asked to commit between $10 million and $20 million. Trump reportedly called some investors and asked them to commit more than $100 million to the PIPE.

The investors who attended the roadshow were shown a demo of the TRUTH Social app being developed by the company. The TRUTH Social app reportedly looks similar to a Twitter feed.

One of the biggest reasons why Trump is pushing for the development of a social media company is due to his account being banned from Twitter, Facebook, and Instagram. Trump had 89 million Twitter followers, 33 million Facebook followers, and 24.5 million Instagram followers at the time he was blocked. Trump was blocked on social media platforms for encouraging his followers to storm the Capitol on January 6, 2021, in order to delay the inauguration of President Joe Biden. The riot disrupted the joint session of Congress, which was assembled to count the electoral votes that would formalize Biden’s victory.

What does this have to do with Phunware?

Many investors are assuming that Phunware will be involved in the development of the technology platform associated with Trump Media & Technology Group. For Trump’s 2020 campaign app, Phunware – a Texas-based software development company – had partnered with American Made Media Consultants to develop The Official Trump 2020 App. However, it has not been confirmed whether Phunware will be involved in this project. But whenever the price of DWAC goes up, Phunware also seems to go up as a sympathy play.

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.