Phunware (NASDAQ:PHUN) is a mobile phone SaaS (Software as a Service) company that just raised a pile of cash. In a recent presentation that the company gave at a Benzinga conference, Phunware said that it now has $66 million in cash on its balance sheet. That’s probably enough to justify its inflated $365 million market valuation with PHUN stock trading at $4.34 as of Monday, Nov. 8.

That might sound like a funny statement since there is no way that just having $66 million equals a $365 million valuation for a company. But in today’s Alice in Wonderland valuation world, cash becomes its own catalyst. I will explain what I mean in a bit, but first, let’s look at what Phunware does.

What Phunware Does

Phunware builds out marketing software for companies for online mobile advertising campaigns. It calls itself an “Internet of Experiences” and a “Multiscreen as a Service” (MaaS) company. Essentially it builds out, supports and maintains cloud marketing initiatives for companies.

This kind of approach works well with political campaigns. The company is seen, according to the mainstream press, as a Trump associate, even though it ran just one campaign initiative in the past.

Most of its revenue really comes from three sources: healthcare companies, media companies and retailers. It charges companies SaaS fees but also makes money from ad fees. Fox Corporation (NASDAQ:FOX) used to be a large portion of its revenue, but the company reported in its latest 10-K that it has completed its statement of work with Fox. Since then the company has begun diversifying its revenue sources.

The problem is that as of June 30 it had just $3 million in net revenue for its six months ending June 30. That does not add up to a $365 million valuation.

Why Raising Cash Helps the Stock

The fact that Phunware was able to raise over $60 million (it had just $2.7 million in gross cash at the end of June) is a testament to what investors think the possibilities are for this company.

In other words, raising so much cash, despite its dilutive effect on the existing holders, allows the company to have many more alternatives. It can acquire companies and acquire Bitcoin (CCC:BTC-USD). This is exactly what it just did — $6.2 million more on Nov. 5, bringing its balance to $7.75 million at a cost of $61,238 per BTC token.

It can develop its own technology through more capex spending and it can invest in minority stakes in other companies. The range of possibilities is quite large with this amount of cash sitting on its balance sheet.

Moreover, there is another interesting thing that happens with companies that have a large amount of cash. Suddenly large potential customers are now willing to sign up with marketing campaigns.

This is because cash talks and everything else walks. Large potential customers now realize that Phunware can hire the necessary developers, technology and customer reps that it needs to take on a large media campaign. Moreover, the company is not going to go out of business anytime soon. Again, cash becomes its own catalyst. Its customers respect the fact that a large pile of cash represents security for a company.

What Investors Should Do With PHUN Stock

Don’t write off PHUN stock just yet. Management may surprise with higher revenue and earnings over the next few quarters (not necessarily Q3) given how cash can enhance its financials.

The only problem is we can’t easily value the stock just yet. There are not enough metrics to justify its $365 million market value. This is not to say that there won’t be in the near future.

On the date of publication, Mark R. Hake did not hold any position (either directly or indirectly) in any of the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Mark Hake writes about personal finance on mrhake.medium.com and runs the Total Yield Value Guide which you can review here.