Fair Value Measurements

12 Months Ended

Dec. 31, 2020

4. Fair Value Measurements

The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring and nonrecurring basis and indicates the fair value hierarchy of the valuation (in thousands):


	As of December 31, 2020
	Total		Level 1		Level 2		Level 3

Assets:
Cash equivalents:
Money market funds	$	1,075,783	$	1,075,783	$	—	$	—
Restricted cash:
Certificates of deposit		74,097		—		74,097		—

Total	$	1,149,880	$	1,075,783	$	74,097	$	—


	As of December 31, 2019
	Total		Level 1		Level 2		Level 3

Assets:
Cash equivalents:
Money market funds	$	650,498	$	650,498	$	—	$	—
Restricted cash:
Certificates of deposit		102,904		—		102,904		—
Prepaid expenses and other current assets:
Assets held for sale		980		—		—		980

Total	$	754,382	$	650,498	$	102,904	$	980

Liabilities:
Warrants liability	$	42,628	$	—	$	—	$	42,628

Total	$	42,628	$	—	$	—	$	42,628

Certificates of Deposit

The Company’s Level 2 instruments consist of restricted cash invested in certificates of deposit. The fair value of such instruments is estimated based on valuations obtained from third-party pricing services that utilize industry standard valuation models, including both income-based and market-based approaches, for which all significant inputs are observable either directly or indirectly. These inputs include interest rate curves, foreign exchange rates, and credit ratings.

Gross unrealized gains or losses for cash equivalents as of December 31, 2020 and 2019 were not material.

Assets Held for Sale

The fair value of assets held for sale were determined based on the Company’s best estimate of fair market value considering the limited market conditions for the assets, recent comparable sales, the age and condition of the assets, current demand, including letters of intent for the sale of the assets, and the views of informed industry sources and third-party specialists. In determining the fair market value of the assets at December 31, 2019, the Company considered a letter of intent it executed with a prospective buyer during November 2019 and its costs to sell the assets. As a result, an impairment charge for the excess of carrying value over the fair value less costs to sell was recorded as general and administrative expense in the consolidated statements of operations. All assets held for sale were sold as of December 31, 2020.

The following table sets forth a summary of the changes in the estimated fair value of the Company’s assets held for sale (in thousands):


Balance as of December 31, 2018	$	24,008
Impairment of assets held for sale		(23,407)
Foreign currency adjustments		379

Balance as of December 31, 2019	$	980
Sale of assets held for sale		(250)
Impairment of assets held for sale		(674)
Foreign currency adjustments		(56)

Balance as of December 31, 2020	$	—

Warrants Liability

In connection with the completion of the Company’s Direct Listing,

all of the outstanding warrants to purchase shares of redeemable convertible and convertible preferred stock converted into warrants to purchase shares of Class B common stock. As a result, the Company reclassified the warrants liability to additional

paid-in

capital. Immediately prior to the Direct Listing and the reclassification to additional

paid-in

capital, the fair value of the warrants liability was estimated using a Black Scholes model and considered the closing price of the Company’s common stock on the first day of trading, the strike price of the warrants, the remaining term of the warrants, a risk-free interest rate that corresponds to the remaining term, and the volatility of comparable companies.

For the year ended December 31, 2019, the warrants liability was included in other noncurrent liabilities in the consolidated balance sheet and the fair value of the warrant liability was estimated using a combination of an option-pricing model and a Monte Carlo simulation model with equal weighting applied to both models in determining the fair values. These models considered many assumptions, including the likelihood of various potential liquidity events, the nature and timing of such potential events, actions taken with regard to the warrants at expiration, as well as discounts for lack of marketability of the underlying securities and warrants.

The assumptions used to calculate the warrants liability as of September 29, 2020, the date immediately before the Direct Listing, and December 31, 2019 were as follows:


	September 29,			December 31,
	2020			2019

Discounts for lack of marketability		—			20.0% - 28.0	%
Fair value of underlying securities		$9.50			$6.81 - $8.04
Expected volatility		66.0	%		66.0	%
Dividend rate		—			—
Risk-free interest rate		0.1	%		1.3	%

The following table sets forth a summary of the changes in the estimated fair value of the Company’s warrants liability (in thousands):


Balance as of December 31, 2018	$	76,069
Net exercises in the period		(33,444)
Change in fair value of warrants		3

Balance as of December 31, 2019	$	42,628
Net exercises in the period		(10,810)
Change in fair value of warrants		(811)
Reclassification to additional paid-in capital as a result of conversion of preferred stock warrants to common stock warrants		(31,007)

Balance as of December 31, 2020	$	—