The stock price of GD Culture Group, a live streaming and e-commerce company, fell 28% on Tuesday after the company announced an equity transaction to acquire all assets of Pallas Capital Holding, including 7,500 bitcoins.
GD Culture will issue nearly 39.2 million shares of common stock in exchange for all assets of Pallas Capital, including bitcoins valued at $875.4 million, the company stated on Tuesday. The deal was reached last Wednesday.
GD Culture's CEO and Chairman, Wang Xiaojian, stated that the transaction will "directly support" its plan to establish a "strong and diversified crypto asset reserve," while benefiting from the growing institutional acceptance of bitcoin as a reserve asset and value storage tool.
The company creates virtual characters using artificial intelligence and operates live streaming and e-commerce businesses through TikTok. This acquisition will make it the 14th largest publicly listed bitcoin holder, joining the trend of companies purchasing cryptocurrency.
The so-called bitcoin treasury companies surged in 2025, with over 190 publicly listed companies currently holding the asset, up from less than 100 at the beginning of the year. The market has grown to $112.8 billion, dominated by Michael Saylor's Strategy, which holds a 68% share.
However, recent momentum has weakened, with some investors concerned that the strategy of raising capital, converting it to bitcoin, and waiting for appreciation may not be sustainable.
According to Google Finance, GD Culture Group (GDC) shares fell 28.16% to $6.99 on Tuesday. The stock price slightly rebounded in after-hours trading, rising 3.7%.
This marks GDC's largest drop in 12 months, bringing its market capitalization down to $117.4 million. The company's stock price is currently down 97% from its all-time high of $235.80 set on February 19, 2021.
Diluting company shares typically triggers a negative market reaction, as it reduces the ownership percentage of existing shareholders.
VanEck warned on June 16 that companies financing bitcoin purchases through stock issuance or debt may face capital erosion if their stock prices fall, as the value of their bitcoin holdings may not be sufficient to support new investments without harming existing shareholders' interests.
"Since some of these companies are raising capital to purchase BTC through large at-the-market (ATM) programs, a risk is emerging: if stocks trade at or near net asset value (NAV), ongoing equity issuance may dilute rather than create value," said Matthew Sigel, VanEck's head of digital asset research, at the time.
GD Culture announced its crypto treasury strategy in May, stating it planned to sell up to $300 million in common stock to invest in cryptocurrencies, including bitcoin and Donald Trump's Official Trump (TRUMP) token.
The stock issuance was announced more than a month after the company received a Nasdaq non-compliance warning due to shareholder equity falling below the minimum requirement of $2.5 million.
Related: Standard Chartered's venture capital division reportedly plans to raise $250 million for a cryptocurrency fund.
Original article: “GD Culture's Stock Plummets Due to $875 Million Bitcoin (BTC) Acquisition Deal”
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