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Fair Value Measurements
 9 Months Ended
Sep. 30, 2022
Fair Value Disclosures [Abstract]  
Fair Value Measurements

11. Fair Value Measurements

Assets and liabilities measured at fair value are classified into the following categories:

 

•

Level 1: Quoted market prices in active markets for identical assets or liabilities.

 

•

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.

 

•

Level 3: Unobservable inputs reflecting the reporting entity’s own assumptions or external inputs from inactive markets.

We classify our cash equivalents and marketable securities within Level 1 or Level 2 because we use quoted market prices or alternative pricing sources and models utilizing market observable inputs to determine their fair value.

The following tables set forth our financial assets as of September 30, 2022 and December 31, 2021 that are measured at fair value on a recurring basis during the period:

 

 

September 30, 2022

 

 

Cost or

Amortized Cost

 

 

Gross

Unrealized

Gains

 

 

Gross

Unrealized

Losses

 

 

Total Estimated

Fair Value

 

 

(in thousands)

 

Cash

$

1,805,384

 

 

$

—

 

 

$

—

 

 

$

1,805,384

 

Level 1 securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government securities

 

1,675,064

 

 

 

20

 

 

 

(13,648

)

 

 

1,661,436

 

U.S. government agency securities

 

59,047

 

 

 

14

 

 

 

(149

)

 

 

58,912

 

Publicly traded equity securities (1)

 

95,406

 

 

 

21,453

 

 

 

—

 

 

 

116,859

 

Level 2 securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt securities

 

279,520

 

 

 

7

 

 

 

(2,429

)

 

 

277,098

 

Commercial paper

 

336,741

 

 

 

—

 

 

 

—

 

 

 

336,741

 

Certificates of deposit

 

172,524

 

 

 

—

 

 

 

(2

)

 

 

172,522

 

Total

$

4,423,686

 

 

$

21,494

 

 

$

(16,228

)

 

$

4,428,952

 

 

(1)

In the second quarter of 2022, we reclassified a strategic investment from Level 3 to Level 1 at its fair value using the beginning-of-period approach, following the commencement of public market trading of the investment during the period (a portion of which was subject to short-term lock-up restrictions as of September 30, 2022).

 

 

December 31, 2021

 

 

Cost or

Amortized Cost

 

 

Gross

Unrealized

Gains

 

 

Gross

Unrealized

Losses

 

 

Total Estimated

Fair Value

 

 

(in thousands)

 

Cash

$

1,966,966

 

 

$

—

 

 

$

—

 

 

$

1,966,966

 

Level 1 securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government securities

 

811,092

 

 

 

1

 

 

 

(1,454

)

 

 

809,639

 

U.S. government agency securities

 

77,409

 

 

 

1

 

 

 

(8

)

 

 

77,402

 

Publicly traded equity securities

 

71,139

 

 

 

122,064

 

 

 

—

 

 

 

193,203

 

Level 2 securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt securities

 

143,124

 

 

 

—

 

 

 

(207

)

 

 

142,917

 

Commercial paper

 

422,328

 

 

 

—

 

 

 

(1

)

 

 

422,327

 

Certificates of deposit

 

80,431

 

 

 

—

 

 

 

—

 

 

 

80,431

 

Total

$

3,572,489

 

 

$

122,066

 

 

$

(1,670

)

 

$

3,692,885

 

 

We held investments in publicly traded companies with an aggregate carrying value of $116.9 million and $193.2 million as of September 30, 2022 and December 31, 2021, respectively, recorded as marketable securities. We recorded total gains of $76.2 million and total losses of $79.8 million related to these investments for the three and nine months ended September 30, 2022, respectively, within other income (expense), net on our consolidated statements of operations. Unrealized gains related to publicly traded equity securities still held as of September 30, 2022 were $53.5 million for the three months ended September 30, 2022 and unrealized losses were $69.7 million for the nine months ended September 30, 2022.

Gross unrealized losses on marketable debt securities were not material for the three and nine months ended September 30, 2022 and 2021, respectively. As of September 30, 2022, we considered any decreases in fair value on our marketable debt securities to be driven by factors other than credit risk, including market risk. As of September 30, 2022, $0.2 million of our total $2.4 billion in marketable debt securities have contractual maturities between one and five years. All other marketable debt securities have contractual maturities less than one year.

We carry the Convertible Notes at face value less the unamortized debt issuance costs on our consolidated balance sheets and present the fair value for disclosure purposes only. As of September 30, 2022, the fair value of the 2025 Notes, the 2026 Notes, the 2027 Notes, and the 2028 Notes was $262.6 million, $725.6 million, $798.0 million, and $1.0 billion, respectively. As of December 31, 2021, the fair value of the 2025 Notes, the 2026 Notes, and the 2027 Notes was $650.1 million, $1.9 billion, and $1.1 billion, respectively. The estimated fair value of the Convertible Notes, which are classified as Level 2 financial instruments, was determined based on the estimated or actual bid prices of the Convertible Notes in an over-the-counter market on the last business day of the period.