Playboy records loss from Rabbitars NFT Project
Lifestyle and media company, toy boyrecorded nearly $5 million in impairment losses as a result of the ETH it holds from ‘Rabbitar’s’ NFT sales conducted in 2021. This is according to a new annual filing with the SEC dated March 16.
In total, Playboy claims to have lost $4.9 million on its Ether balance after choosing to hold on to the funds generated from the first Rabbitars NFT drop. The collection consists of 11,953 pieces, each of which goes for 0.1953 ETH in honor of the year the company was established. Given that the price of ETH at the time was $4,324, it’s safe to assume that the company raised in the region of $10 million from the sale.
But last December, the value of ETH still in the Playboy wallet was $327,000, according to the filing. The significant loss has a lot to do with the tough times that have hit the crypto market over the past year. ETH suffered a 72% loss between October 2021 and December 2022.
How Playboy earnings are affected by impairment losses
Impairment losses occur when the fair value of said assets falls below their book value at any time. According to Playboy, the company stands for its digital assets as “intangible assets with an indefinite useful life” which is subject to impairment.
An extract from the archive reads: “The market price of a [ether] in our main market ranged from $964 to $3,813 during the year ended December 31, 2022, but the book value of each Ethereum we held at the end of the reporting period reflects the lowest price of an Ethereum listed on the active exchange at any time since the was received.”
This clearly indicates that negative fluctuations in the price of ETH had an impact on the company’s earnings and book value. According to the filing, the only time an increase in the price of these digital assets has a positive impact on earnings is when the ETH held on the balance sheet is sold at a profit.
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Basil is an avid fan of blockchain technology and all its innovations, and he is passionate about sharing this narrative with his audience. He has spent over five years in the crypto space, specializing in research and creating Web3 content for various media around the world.
