- Playboy reveals that it faced a loss of $4.9 million from their Ethereum balance.
- The brand accepted Ethereum in exchange for its NFT collection.
- With Ether price dropping since the NFT launch, the losses were inevitable.
The parent company of Playboy, PLBY Group, recorded a $4.9 million impairment loss on Ethereum it held as digital assets last year, due to a decline in broader market prices during the crypto winter.
The loss was taken on Ethereum $ 1,734.05 4.76% accepted as payment for the company’s ‘Rabbitars’ non-fungible tokens (NFTs), launched in 2021, which were held as digital assets on its balance sheet.
The carrying value of each Ethereum held at the end of the reporting period reflected the lowest price of one Ethereum quoted on the active exchange at any time since its receipt, resulting in the impairment loss.
Much like many other existing companies, Playboy joined the NFT bandwagon before the brutal crypto winter of 2022. In detail, Playboy had launched its ‘Rabbitar’ NFT project during the peak of the crypto market in October 2021, but ETH lost about 60% in value since then.
The company’s filing mentioned how their digital assets were indefinite-lived intangible assets. Thus, this made them subject to impairment losses when their fair value dropped below their carrying value during that particular time.
In this case, the impairment losses taken by the company for the digital assets cannot be recovered. Not even when the fair value of the digital assets rise after taking the impairment losses. The filling even highlights:
The market price of one Ethereum in our principal market ranged from $964 – $3,813 during the year ended December 31, 2022, but the carrying value of each Ethereum we held at the end of the reporting period reflects the lowest price of one Ethereum quoted on the active exchange at any time since its receipt.
The filing then concludes that negative swings in the market price of Ethereum could certainly have a material effect on the brand’s earnings, not to mention its carrying value. Lastly, it acknowledges that the only time a price rise will affect the company’s earnings in a good light is when ETH from their balance sheet can be sold at a gain.
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- Source: https://cryptonewsland.com/playboy-accumulated-4-9m-in-losses-from-ethereum/
