Shares of Seven Stars Cloud Group (NASDAQ: SSC) soared on Wednesday after the company announced the acquisition of an additional 20% stake in BBD Digital Capital Group. A mention of blockchain in the press release announcing the deal was enough to trigger the rally, adding to Monday's gain. Shares of Seven Stars were up about 34% at 12:20 p.m. EST.
Seven Stars will pay $9.8 million, composed of $2 million in cash and $7.8 million worth of common stock, to Tiger Sports Media Limited for a 20% stake in BBD Digital Capital. Seven Stars already owns 40% of the company, so this deal will make it the majority owner.
"BBD Digital Capital will focus on leveraging the BBD brand with artificial intelligence-driven financial data services as well as transactional platforms for index, futures and derivative trading, for both global commodity and energy clients," according to the press release.
Why is such a small transaction causing the stock to soar? Here's the relevant line in the press release: "BBD Digital Finance is positioned to operate a global AI + Blockchain digital issuance & trading platform of index / future derivatives."
The mania surrounding cryptocurrencies and blockchain technology is what's driving shares of Seven Stars higher. The stock is now up more than 300% over the past three months due solely to blockchain-related announcements. That's despite the company being unprofitable, producing a $25 million net loss over the past 12 months. Buyer beware.