PLBY Group, the parent company of Playboy, reported a $4.9 million impairment loss on Ethereum held last year due to a significant decline in the cryptocurrency market. The company accepted Ethereum as payment for its non-fungible tokens (NFTs) called “Rabbitars,” launched in 2021, which are held in its balance sheet as digital assets.
Playboy held Ethereum throughout the bear market
The annual filing released on Thursday indicated that the value of the digital assets was $327,000 as of last year, with a previous filing showing a value of $1.75 million as of September 30, 2021.
According to the company, its digital assets are considered “indefinite-lived intangible assets” and are susceptible to impairment losses if their fair value falls below their carrying value at any time. Even if the fair value of the assets rises after taking the impairment losses, the company cannot recover these losses.
As per the filing, the market price of one Ethereum in the company’s principal market fluctuated between $964 to $3,813 during the year that ended on December 31, 2022. However, the carrying value of each Ethereum held by the company at the end of the reporting period reflects the lowest quoted price of one Ethereum on the active exchange since its receipt.
Thus, negative market price swings of Ethereum could significantly affect the company’s earnings and carrying value, while an increase in Ethereum prices would only benefit the company’s earnings when the Ethereum held on the balance sheet is sold at a profit.
Rabbitar NFT collection
During the height of the crypto market in October 2021, PLBY Group launched its “Rabbitar” NFT project, accepting Ethereum as payment for the non-fungible tokens. However, Ether, the native token of Ethereum, has since lost about 60% of its value since October 2021, as per TradingView data.
Playboy had previously ventured into the NFT and blockchain technology industry with its NFT drop called “Liquid Summer,” featuring digital artworks created in collaboration with the artist Slimesunday. The collection, which was minted in May 2021, showcases archival photographs of Playboy model Lenna Sjööblom, who is also known as the “First Lady of the Internet.”
Prior to its recent NFT projects, the company had already ventured into the digital asset arena. Back in 2018, Playboy TV started accepting Bitcoin payments, and by June of this year, Bitcoin payments were accepted on Playboy.com. As of December, the company’s digital assets had a net carrying value of $327K.
Playboy sees potential in NFTs and blockchain despite the unrealized losses
Despite the recent loss, Playboy is still bullish on the potential of NFTs, and the company has stated that it plans to continue exploring the technology. “We believe that the NFT market represents a significant opportunity for Playboy to engage with our audience and generate new revenue streams,” the company said in a statement.
The financial report for the fourth quarter of 2021, which was released by Playboy earlier this month, revealed a net loss of $8.4 million, in contrast to the net loss of $4.4 million during the same period the prior year.
Source: nft.news
This news is published and verified by the NFT News media team.
