Mobile software and blockchain company Phunware, Inc. (NASDAQ: PHUN) recently launched additional resources to restrict short selling of Phunware securities.
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Shares of the company reacted positively to the news as it gained almost 6.6% in yesterday’s trading session. However, it pared its gains by 1.2% to close at $2.56 in the extended trade.
Strategic Impact
An investment strategy that involves betting against a stock, short selling involves short sellers borrowing shares they do not own from brokerage firms and selling them on the open market with the expectation they’ll be able to buy back the shares they owe at a lower price.
The management of Phunware has launched this resource with the aim of protecting its share price from downward pressure.
Management Commentary
Chief Financial Officer of Phunware, Matt Aune, said “Short selling recently made headlines in the wake of what happened with companies like GameStop and AMC when retail investors were able to successfully restrict the number of shares available in order to cause a short squeeze. While many retail investors hope the price of their shares will go up, many don’t realize their brokerage may be loaning those same shares to short sellers who work in opposition to price appreciation or that they can often restrict this practice by not allowing brokerages to loan out their shares.”
Analyst Rating
The stock has a Moderate Buy consensus rating based on one Buy. Last month, Roth Capital analyst Darren Aftahi reiterated a Buy rating on the stock with a price target of $4 (54.4% upside potential). Shares of the company have gained 13.6% over the past year.
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