GD Culture’s Stock Plummets After Bitcoin Acquisition Deal
Shares of Nasdaq-listed GD Culture Group plunged 28% on Tuesday following the announcement of a share issuance deal to acquire all assets of Pallas Capital Holding, including 7,500 Bitcoin valued at approximately $875.4 million. The transaction, agreed last Wednesday, involves GD Culture issuing nearly 39.2 million common shares to complete the acquisition.
Strategic Shift Toward Crypto Asset Reserves
GD Culture’s CEO and chairman, Xiaojian Wang, emphasized that the acquisition aligns with the company’s strategy to establish a “strong and diversified crypto asset reserve.” Wang highlighted Bitcoin’s increasing institutional acceptance as a reserve asset and store of value as a key factor in this move.
Originally focused on livestreaming and e-commerce via platforms like TikTok, GD Culture leverages artificial intelligence to generate virtual personas. With this deal, the company is poised to become the 14th largest publicly traded Bitcoin holder, joining a growing cohort of firms expanding their crypto treasuries.
Market Context: Growth and Risks in Bitcoin Treasury Companies
The number of publicly listed companies holding Bitcoin has surged in 2025, rising from fewer than 100 at the start of the year to over 190, with a combined market value of $112.8 billion. This sector is dominated by Michael Saylor’s MicroStrategy, which controls 68% of the market.
However, investor enthusiasm has recently cooled amid concerns over the long-term viability of raising capital, converting it into Bitcoin, and relying on price appreciation. Notably, companies that finance Bitcoin acquisitions through stock issuance risk shareholder dilution and capital erosion if share prices decline.
Sharp Stock Decline and Dilution Concerns
GD Culture’s shares dropped to $6.99 on Tuesday, a 28.16% decline, marking the largest single-day fall in over a year and pushing its market capitalization down to $117.4 million. The stock has lost 97% of its value since its peak of $235.80 in February 2021.
The share issuance required for the acquisition diluted existing shareholders’ ownership, a factor that likely contributed to the steep selloff. Following the drop, shares recovered slightly in after-hours trading, gaining 3.7%.
VanEck’s head of digital assets research, Matthew Sigel, has previously warned that companies engaging in large at-the-market (ATM) stock offerings to purchase Bitcoin face risks if their stock trades near net asset value (NAV), as continued equity issuance can undermine shareholder value rather than enhance it.
Previous Crypto Treasury Plans and Regulatory Challenges
In May, GD Culture revealed its intention to build a crypto treasury by selling up to $300 million in common stock to invest in Bitcoin and other digital assets, including the Official Trump (TRUMP) token. This announcement came shortly after Nasdaq issued a noncompliance warning due to the company’s stockholder equity falling below the minimum $2.5 million threshold.
GD Culture’s pivot to cryptocurrency underscores the growing trend among public companies to accumulate digital assets, yet it also highlights the challenges and market skepticism surrounding the sustainability of such strategies.
FinOracleAI — Market View
GD Culture’s announcement of a substantial Bitcoin acquisition financed through a large share issuance has triggered a sharp negative market reaction, reflecting investor concerns over dilution and the viability of crypto treasury strategies funded by equity issuance. The company’s stock decline underscores the risk that market capitalization may not support the value of newly acquired digital assets, especially amid broader market volatility in crypto holdings.
Investors should monitor GD Culture’s ability to integrate these assets effectively and the performance of its stock relative to Bitcoin price movements. Further dilution or share price weakness could exacerbate capital erosion risks.
Impact: negative
