PLBY Group Loses $4.9M after Receiving Ethereum Payments for Its ‘Rabbitars’ NFT
Negative swings in the market price of Ethereum may have had a material impact on the company’s earnings and carrying value.
PLBY Group (NASDAQ: PLBY) has announced that it lost about $4.9 million in the value of the Ethereum (ETH) assets it held last year. The parent company of Hugh Hefner’s Playboy confirms that the impairment loss came as a result of the crypto winter that swept through the industry and significantly impacted market prices across the board.
PLBY Group Gives Analysis, Claims Impairment Losses May Not Be Recovered
According to a recent filing, the lifestyle and media company says it was accepting Ethereum as payments for its “Rabbitars” non-fungible tokens (NFTs). And these assets, it holds as digital assets in its balance sheet, says PLBY Group. The filing, however, reveals that the value of its digital assets was $327,000 as of last year. Whereas, an earlier filing on September 30 had valued the company’s digital assets at $1.75 million.
Despite the discrepancies, the company says it operates with the concept that its digital assets are “indefinite-lived intangible assets,” and are subject to impairment losses. That is, the fair value of the assets may fall below their carrying value at any time.
PLBY also explains further that such impairment losses on digital assets may not be recovered. That is even if the fair value of the assets rises again after taking the hit. Part of the filing reads:
“Therefore, negative swings in the market price of Ethereum could have a material impact on the company’s earnings and carrying value.”
Meanwhile, the company also revealed the only time a price rise can potentially impact its earnings positively. According to the filing, this can only happen when the Ethereum it holds in its balance sheet, is sold at a gain.
Since PLBY launched its “Rabbitar” NFT project in October 2021, Ethereum has lost about 60% in value, per TradingView data.
It might be worth noting that the Rabbitars NFT is not Playboy’s first foray into the NFT space. Before launching the project, the company carried out an NFT drop called “Liquid Summer” in early 2021.
Playboy is also keen on blockchain technology. It first delved into the blockchain technology industry in 2018. That was when Playboy TV started accepting bitcoin payments before later expanding to Playboy.com in June. The company also announced its MetaMansion project in February, signaling its intent to move to the metaverse.
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Mayowa is a crypto enthusiast/writer whose conversational character is quite evident in his style of writing. He strongly believes in the potential of digital assets and takes every opportunity to reiterate this.
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