Please ensure Javascript is enabled for purposes of website accessibility

Here's Why Future FinTech Group Stock Was Up Almost 16% Last Month

By Jon Quast - Apr 7, 2021 at 11:25AM

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

Investors are buying into a story more than celebrating the performance of the business.

What happened

Shares of Future FinTech Group (FTFT 5.35%) were up 15.7% in March, according to data provided by S&P Global Market Intelligence. The stock's upward movements largely mirrored that of popular cryptocurrency Bitcoin

So what

Future FinTech describes itself as "a leading blockchain e-commerce company and a service provider for financial technology." Because of its stated association with blockchain technologies and its recent announcements that it's mining Bitcoin, traders tend to bid this stock up when the price of Bitcoin is rising. Granted, the company did make announcements during March. But, looking at a chart, these announcements didn't move the needle as much as the price movements of Bitcoin.

A dollar bill is folded into the shape of an upward pointing arrow.

Image source: Getty Images.

We don't have a lot of insight into Future FinTech's current financials. On March 31, the company filed with the Securities and Exchange Commission (SEC), saying its financial results for 2020 are going to be filed late. However, it didn't make any money from Bitcoin as of its most recent filing for the period ending in September. And it likely hasn't made much (or any) from Bitcoin since then.

Therefore, it doesn't make a whole lot of sense for Future FinTech stock to track with Bitcoin. But the prevailing narrative right now is that whatever is good for Bitcoin is good for blockchain technologies and therefore good for Future FinTech. And as Morgan Housel says in his book The Psychology of Money, "Stories are, by far, the most powerful force in the economy." It's why Future FinTech stock was up in March. 

FTFT Chart

FTFT data by YCharts

Now what

Investing in a story can work in the short term, and Future FinTech is a good example of this. However, it's impossible to predict whether the narrative will someday change. For that reason, I'd advocate for playing a different game: buy-and-hold investing for the long term. But this game is different from trading stocks with a short time horizon. Rather than buying into a narrative, we're looking at economic trends and business fundamentals. 

Examining Future FinTech stock through this long-term lens paints a cautious picture: For 2020 the company expects to report revenue of just $370,000 -- down 59% year over year. Furthermore, it expects to report an operating loss of $51 million. These steep losses are why the company continues to raise funds by offering stock and diluting current shareholder value.

As long as that's the case, it's hard to imagine Future FinTech stock beating the market over the long haul.

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
$0.40 (5.35%) $0.02
Bitcoin Stock Quote
Bitcoin
BTC
$20,360.43 (2.91%) $576.35

*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 analyst team.

Stock Advisor Returns
323%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/06/2022.

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.