What happened?
GD Culture Group’s shares plunged by 28% following their announcement to acquire 7,500 Bitcoin in a share-based deal with Pallas Capital Holding. The ecommerce and livestreaming firm plans to issue 39.2 million common shares to acquire Pallas Capital’s assets, which includes an estimated $875 million worth of Bitcoin.
Who does this affect?
This primarily affects the shareholders of GD Culture Group, who are concerned about the dilution caused by the issuance of new shares. The move to build a crypto asset reserve is perceived as speculative, causing unease among investors and triggering a significant drop in the company’s stock price.
Why does this matter?
The move by GD Culture Group contributes to a growing trend of public companies creating “Bitcoin treasuries” by holding BTC on their balance sheets, despite regulatory and financial concerns. However, strategies like these can potentially erode shareholder value if the company’s market price falls below the value of their assets, leading to implications for market stability.