GD Culture Group Stock Declines Following Pallas Capital Bitcoin Acquisition

GD Culture Group Announces Pallas Capital Acquisition

GD Culture Group Limited (GDC) (Nasdaq: GDC), an artificial intelligence-powered livestreaming and e-commerce firm, announced on September 10, 2025, a definitive share exchange agreement to acquire Pallas Capital Holding Ltd., a British Virgin Islands registered company. The strategic move is designed to bolster GDC's digital asset treasury, specifically by integrating a substantial holding of Bitcoin (BTC).

Transaction Details and Strategic Rationale

Under the terms of the agreement, GDC will issue 39,189,344 shares of its common stock to acquire 100% of Pallas Capital's issued and outstanding ordinary shares. This transaction includes the transfer of 7,500 Bitcoin to GDC, free and clear of any encumbrances. Based on a current Bitcoin price of approximately $116,900, the acquired Bitcoin represents an aggregate value of approximately $876.8 million. This implies a value of roughly $22.37 per share of GDC common stock issued for this asset acquisition.

Mr. Xiaojian Wang, Chairman and Chief Executive Officer of GD Culture Group, articulated the company's vision, stating:

"The acquisition of Pallas Capital marks a significant advancement in GDC's digital asset treasury strategy. It directly supports our initiative to build a strong and diversified crypto asset reserve by acquiring scalable, high-value digital assets. By acquiring Pallas Capital and its 7,500 Bitcoin through this transaction, we are positioning GDC to capitalize on Bitcoin's growing role as a store of value and institutional reserve asset. When we integrate these assets, we are building the reserves necessary to execute on our digital asset strategy with both stability and growth potential. Looking ahead, we are confident that this acquisition will deliver meaningful value to our shareholders as we continue to execute our vision of becoming an established player in the digital asset ecosystem."

The acquisition has received majority shareholder approval, satisfying requirements under Nevada Revised Statutes and Nasdaq Listing Rule 5635(d). GDC aims to strengthen its reserve portfolio and establish a stronger presence in the expanding decentralized finance (DeFi) ecosystem.

Immediate Market Reaction and Dilution Concerns

Following the announcement, GDC's stock experienced a sharp decline, with shares falling 28.16% to $6.99. This marked the company's largest single-day decrease in over 12 months, reducing its market capitalization to $117.4 million. The negative market reaction is largely attributed to concerns over share dilution, as the issuance of nearly 40 million new shares significantly increases the outstanding share count, potentially diminishing the value of existing shareholders' equity. Despite an earlier surge of 10.16% in the 24 hours prior to the full details and a substantial increase of 157.5% over the past month and nearly 300% year-to-date, the immediate response to the acquisition specifics was decidedly negative. After-hours trading showed a modest recovery, with gains of 3.7% following the initial sell-off.

Broader Context: Bitcoin Treasury Trends

This acquisition positions GD Culture Group as the 14th largest publicly traded company with the most significant Bitcoin treasury reserves, according to BitcoinTreasuries data. The year 2025 has seen rapid expansion in the number of Bitcoin treasury companies, growing from fewer than 100 at the beginning of the year to over 190 publicly listed firms now holding the asset.

However, the broader market for companies accumulating Bitcoin via stock issuance has begun to face scrutiny. VanEck analysts have voiced skepticism regarding the dilution caused by issuing new shares to finance such speculative strategies. They warned that "companies financing treasury reserves through stock offerings may erode shareholder value if their market price falls below the value of their assets." This sentiment reflects a growing debate on the sustainability of "convert-and-hold" strategies, particularly as momentum in the sector has shown signs of slowing. Currently, Michael Saylor's MicroStrategy continues to dominate this segment, holding a 68% share of the $112.8 billion sector.

Analyst Commentary and Outlook

The acquisition of Pallas Capital represents a significant corporate action for GD Culture Group, shifting its strategic direction further into the digital asset space. While the company's leadership expresses confidence in the long-term value creation through increased Bitcoin reserves and a stronger presence in DeFi, the immediate market response underscores investor sensitivity to dilution.

Analysts will closely monitor how GDC integrates these substantial Bitcoin holdings and whether the perceived long-term benefits outweigh the short-term impact of share dilution. The company's ability to demonstrate tangible value creation from its digital asset strategy will be crucial in restoring investor confidence and stabilizing its stock performance in the coming weeks and months. The broader implications for other companies pursuing similar Bitcoin treasury strategies will also be a key area of observation.