Shares of Future FinTech (FTFT -1.80%) flew higher on Thursday following the company's announcement of a new joint venture in the United Arab Emirates. As of 12:30 p.m. EST, the stock was up 10%.
Future FinTech was formerly a fruit-juice company called SkyPeople Fruit Juice. Since rebranding, it's been pursuing blockchain technologies to aid in e-commerce. Its new business announced Thursday is FTFT Capital Dubai, and will be based in Dubai. Future FinTech is partnering for the venture with Shenzhen SOSOB, a provider of real-time price information for cryptocurrencies and other digital assets.
It wasn't overly clear from the press release what FTFT Capital Dubai will do exactly, nor how it will generate revenue. Future FinTech's CEO simply said it "will serve the digital currency markets." The company will pay $5.5 million for a 55% stake. For its part, Shenzhen SOSOB will put 80% of its equity interest into FTFT Capital Dubai, making Shenzhen SOSOB an 80%-owned subsidiary of FTFT Capital Dubai.
Beyond Future FinTech's $5.5 million pay-in, the news release was light on financial details. Therefore, it's possible this was not what was driving the stock higher Thursday. Many cryptocurrency-related stocks were on the move, and Future FinTech often follows that crowd. However, it's clear that the company would benefit greatly from having a new venture like this work out. As of its most recent quarterly report, Future FinTech generated less than $44,000 in quarterly revenue.
Finally, it's unclear how Future FinTech will finance this deal. Even if $5.5 million seems like small peanuts for a company with a market capitalization of more than $400 million, the company had under $1 million in cash as of the end of its most recent quarter.