Playboy, the iconic adult publication, has suffered a significant loss of almost USD 5 million on its NFT earnings due to the market downturn last year.
The parent company, PLBY Group [PLBY], reported an Ethereum impairment loss of USD 4.9 million in its annual filing, citing the decline in the fair value of its digital assets. Playboy had started accepting Ethereum for its NFT initiative, “Rabbitars,” which was launched in October 2021. However, as of the end of the year, the value of its digital assets had plummeted to USD 327,000.
The company treats its digital assets as “indefinite-lived intangible assets,” which means they are vulnerable to impairment losses if their fair value falls below their carrying value. Unfortunately, impairment losses cannot be recovered, even if the fair value of the assets increases. Additionally, the firm noted that Ethereum’s price volatility had a significant impact on its earnings.
The filing further stated that negative swings in Ethereum’s market price could have a material impact on the company’s earnings and carrying value. The only time a rise in prices will impact the company’s earnings positively is when the Ethereum held in the balance sheet is sold at a gain. Playboy’s NFT project was launched at the height of the cryptocurrency market, hoping to capitalize on the growing interest in digital assets. Unfortunately, the market downturn has hit the company’s earnings hard.
