Please ensure Javascript is enabled for purposes of website accessibility

Why Future FinTech Stock Flew Today

By Jon Quast - Mar 18, 2021 at 1:42PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company is launching a new joint venture in Dubai.

What happened

Shares of Future FinTech (FTFT -0.45%) 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%.

So what

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. 

A businesswoman draws a growth curve over a bar chart displayed on a transparent touchscreen.

Image source: Getty Images.

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. 

Now what

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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Future FinTech Group Stock Quote
Future FinTech Group
FTFT
$0.51 (-0.45%) $0.00

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
327%
 
S&P 500 Returns
116%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/20/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.