Nasdaq-traded livestreaming firm GD Culture Group had its worst trading day in more than a year, falling 28% after declaring an $875 million acquisition of Bitcoin. The stock crash followed when investors came to know that the company would sell almost 39.2 million new shares to close the cryptocurrency buy transaction.
The livestreaming company, which uses artificial intelligence, entered into an agreement with Pallas Capital Holding to purchase all assets, including 7,500 Bitcoin tokens valued at around $875.4 million. This acquisition makes GD Culture the 14th largest publicly traded corporate Bitcoin holder in the marketplace.
On Tuesday, GD Culture shares fell to $6.99, the company’s highest drop since the beginning of 2024 and a drop in market value to $117.4 million. After-hours trading saw shares regain some ground, up 3.7% as some investors considered the drastic fall to be a potentially oversold situation.
The large share issue dilutes the ownership rights of the current shareholders, which provokes a mass panic among investors regarding the feasibility of the Bitcoin treasury corporate policies. VanEck had already cautioned that firms funding the buying of cryptocurrency by diluting equity risk, losing shareholder value in the event of a sharp drop in stock prices.
CEO Xiaojian Wang justified the acquisition, saying it would directly facilitate the creation of a strong and diversified crypto asset reserve and the opportunity to capitalize on the institutional adoption of Bitcoin. The company provides e-commerce applications based on AI-generated virtual personalities on TikTok-based livestreaming services.
This acquisition is part of a larger corporate trend of adopting Bitcoin, as publicly listed companies that hold the cryptocurrency grow in number, from less than 100 to more than 190 since January. The cumulative market of corporate holdings of Bitcoin has increased to $112.8 billion, with MicroStrategy holding a commanding market share of 68%.
In May, GD Culture had already announced its intention to sell up to $300 million in stock to invest in cryptocurrencies, such as Bitcoin and Trump’s official memecoin. The company was warned by Nasdaq of noncompliance with minimum stockholder equity requirements below the threshold standards of $2.5 million.
The current share prices reflect a 97% drop since GD Culture reached an all-time high of $235.80 per share in February 2021.
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