Chinese beauty app expects up to $52m in losses on crypto investments

Meitu, a Hong Kong-listed beauty app, expects to see a loss between 274.9 million yuan (US$41.1 million) to 349.9 million yuan (US$52.3 million) for the first half of 2022, as the company’s holdings in cryptocurrencies have been hit by the crash in market prices.

Photo credit: Meitu

As a result, Meitu could see a 154% increase in net loss over the first half of 2022 compared to a year ago. The company said it has not sold its cryptocurrencies since March 2021 after hoarding 31,000 ether (US$32.7 million) and 940.89 bitcoin (US$18 million).

However, Meitu said that the losses from its crypto investments will not affect its cash flow, bottom line, or operations. The company anticipates the value of its crypto holdings to increase by the end of the year.

“Despite such volatility, the board takes the view that such adoption has ample room to grow given the blockchain industry is still developing rapidly, and cryptocurrencies are an integral part of that,” the company said in a statement.

Recently, Bitcoin plummeted below US$20,000, down nearly 70% below its high of US$68,000 in November 2021. Meanwhile, Ethereum has lost over two-thirds of its value since November 2021.

See also: First Luna, now Celsius. What’s behind the latest crypto crisis?

The profit warning pushed Meitu into the red as its shares slid nearly 8% to HK$0.96 on Monday morning Asia time.

Founded in 2008, Meitu is a free photo-editing app for iOS and Android. It uses facial recognition and augmented reality technology and offers basic cropping, collage-making, exposure correction, and filter functions.

Currency converted from yuan, ether, bitcoin, and HK dollar to US dollar: US$1 = 6.69 yuan, 1 ether = US$1,048.48, 1 bitcoin = US$19,090.5, US$1 = HK$7.85.