What happened

Shares of Future FinTech Group (FTFT -1.08%) jumped on Tuesday morning, after the company announced it's acquiring a 60% stake in Sichuan Ticode Supply Chain Management Co. -- or just Ticode for short. It seems investors are excited about this news, perhaps because two other recent acquisitions fell through. As of 11 a.m. EST, Future FinTech stock was up almost 10%.

So what

Future FinTech was formerly a fruit juice company called SkyPeople Juice Group. But management recently decided to pivot the company toward blockchain and cryptocurrency solutions. Part of the ongoing strategy shift has included making acquisitions like its announced acquisition of Ticode today. According to the press release, the deal is valued at just nine times trailing net earnings, which is quite a bargain.

A businessman draws an upward arrow over a stock chart displayed on a transparent touchscreen.

Image source: Getty Images.

This comes after Future FinTech called off two previously announced acquisitions last week. On Jan. 4, the company had announced intentions to acquire a 60% stake in a Dominican Republic company called Blocknance Financial International. And on Dec. 18, it announced it wanted a more than 70% stake in Asiasens Investment Holding. However, both of these deals were called off, and Future FinTech stock fell as a result. 

Now what

There's a couple things Future FinTech shareholders should keep in mind. First, press releases and filings with the Securities and Exchange Commission (SEC) aren't up to date on the company's investor-relations website. If you're closely monitoring this company's progress, you'll need to be sure to check resources like PR Newswire and the SEC's website. 

Shareholders also need to make sure they're comfortable with Future FinTech's approach. The plan seems to be growth through acquisition, not organic growth. And right now, acquisitions are being funded with stock. Sometimes, this is actually a good strategy if you can find a good deal -- and the Ticode deal looks good to me on the surface. However, it does amplify long-term shareholder risk. When growth is acquired and funded by stock, each deal needs to make an impact and management can't overpay. Otherwise, shareholders face dilution risk with marginal long-term upside.