A loophole in Nasdaq Inc.’s rules is under scrutiny after a roller-coaster ride in the stock of one small company highlighted how firms can go public without ample shares to trade.

Phunware Inc., a software company planning to launch its own cryptocurrency, surged about 3,750% over six trading days to hit an intraday high of $550 a share on Jan. 10. Just 144,000 shares were eligible to freely trade during that period, according to the company. The stock closed at $95.85 on Wednesday, down 15% for the day.

Nasdaq’s...