Phunware Inc (NASDAQ:PHUN) Stock is All Set To Gap-Up: How To Trade Today?

If any investors is currently looking into the premarket action in the markets today then it is unlikely that he has missed the action in the Phunware Inc (NASDAQ:PHUN) stock. The stock is up by as much as 12% in premarket trading and it could be a good time to take a closer look at the company’s business as well as some of the latest developments.

The company is a pioneering entity in the field of location-based SaaS (software as a service) and offers a fully integrated enterprise cloud platform for mobile. The platform helps brands with monetization, engagement, and management from anywhere and at any time. The software development kits which are offered by the company include location-based services, content management, mobile engagement, loyalty (PhunCoin&PhunToken), messaging, advertising, and analytics.

Despite the premarket rally in the stock, it ought to be noted that Phunware has performed poorly in 2023 and was not a part of the speculative rally in tech stocks. The stock lost as much as 50% of its value this year so far. Yesterday, the company was in the news after news emerged about layoffs at Phunware. The company revealed that as much as one third of its employees would be laid off and that brought further pressure on the stock yesterday.

However, the company also revealed that the layoffs would help in saving as much as $5 million in cash on a yearly basis in terms of cost savings. The company is striving to hit profitability currently and hence, the pressure on the stock may have come as a surprise. Similar announcements from many other tech companies had in fact been met with excitement by market participants.

The downward pressure on the stock may however suggest that investors are becoming considerably concerned with the direction of the company. There may also be doubts that the company can actually grow quickly so as to make its way out of the loss-generating spiral. While the lower number of employees may signal lower expenses, it may also curtail the company’s capability of generating suitable growth over time. However, it is still early days and it remains to be seen if the move erodes or boosts shareholder value over the near term.

However, in the press release sent out by Phunware yesterday, the company noted that the move was not a verdict on the competence, abilities, performance or dedication of the employees. In fact, it was a decision that was strategic in nature so that the company could devote its entire focus only in those opportunities which would generate revenues.

Russ Buyse, the Chief Executive Officer of the company, noted that the laid-off employees were being provided support during the transition period. The company also noted that it was going for many other cost-cutting efforts so as to become a more efficient and leaner operation. Buyse noted that the move would lower its operating costs considerably.