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Redeemable Common Stock, Common Stock, and Stockholders' Equity (Deficit)
 9 Months Ended
Sep. 30, 2023
Equity [Abstract]  
Redeemable Common Stock, Common Stock, and Stockholders' Equity (Deficit)
10. Redeemable Common Stock, Common Stock, and Stockholders' Equity (Deficit)
Redeemable Common Stock

The Company issued 64,046,223 shares of common stock at various dates in 2019, 2020, and 2021 to select investors that are subject to redemption at fair value of common stock at the investor’s option after November 6, 2029. In accordance with the SEC and its staff’s guidance on redeemable equity instruments, which has been codified in ASC 480-10-S99, redemption provisions not solely within control of the Company require classification of the associated instrument outside of permanent equity.
As of December 31, 2022, the Company determined that the redeemable shares were probable of becoming redeemable. In accordance with ASC 480-10-S99, the Company elected to recognize changes in redemption value immediately as they occur. The per-share redemption value is equal to the fair market value of a single share of the Company’s common stock subject to a floor of the initial carrying value.
Immediately prior to the IPO, the redeemable common stock was accreted to the IPO issuance price of $30.00 per share. Upon the IPO, all shares of the Company’s redeemable common stock automatically converted into 64,046,223 shares of Series B common stock. This transaction resulted in a reclassification of $1,931.5 million in redeemable common stock to permanent equity including an increase to additional paid-in capital of $136.9 million and Accumulated Deficit of $1,794.6 million for the nine months ended September 30, 2023 to reverse accretion recorded to these accounts.

Common Stock

Immediately following the effectiveness of the registration statement relating to our IPO, we filed our Amended and Restated Certificate of Incorporation, which authorized a total of 3,000,000,000 shares of Series A common stock, 350,000,000 shares of Series B common stock, and 100,000,000 shares of undesignated preferred stock. All shares of common stock then outstanding were reclassified as Series B common stock. The rights of the holders of Series A common stock and Series B common stock are identical, except with respect to voting and conversion. Each share of Series A common stock is entitled to one vote per share and is not convertible into any other shares of the Company’s capital stock. Each share of Series B common stock is entitled to ten votes per share and is convertible into one share of Series A common stock at any time. The Company’s Series B common stock also will automatically convert into shares of Series A common stock upon certain transfers and other events.

Preferred Stock

The Company has authorized 100,000,000 shares of Preferred Stock with a par value of $0.001 per share. As of September 30, 2023, there were no shares of Preferred Stock issued or outstanding.

Common Stock Warrants

On July 28, 2022, the Company granted warrants to purchase up to 15,743,174 shares of common stock in connection with the collaboration agreement and strategic partnership with Shopify as compensation for marketing services. 25% of the shares subject to the warrants vested on the grant date, and the remaining 75% of the shares subject to the warrants vest quarterly in equal amounts until July 28, 2027. On September 22, 2023, upon the Company’s IPO, the vesting of 25% of the total number of warrants was accelerated, and the remaining unvested portion vests quarterly over the remaining term. Vesting will cease, and any unvested portion of the warrants will be cancelled, in the event of a material breach or early termination of the collaboration agreement by Shopify. The exercise price is $0.01 per share, and the term of the warrants is 10 years. These common stock warrants are included as a component of additional paid-in capital within the Consolidated Balance Sheets upon vesting. The Company valued the warrants at the grant date using the Black-Scholes option pricing model with the following assumptions: fair value of common stock, a dividend yield of zero, contractual terms of 10 years, volatility of 55.00%, and a risk-free rate of 2.85%.
The following table summarizes the warrants activity during the nine months ended September 30, 2023:
Number of SharesWeighted Average Exercise PriceWeighted Average Remaining Life (years)
Warrants outstanding at January 1, 2023
11,217,017$0.01 9.57
Granted—
Exercised(5,706,904)$0.01 8.96
Cancelled—
Warrants outstanding at September 30, 2023
5,510,113 $0.01 8.83
During the three and nine months ended September 30, 2023, 4,526,162 and 5,706,904 warrants vested, respectively. The Company has no vested but not exercised warrants outstanding as of September 30, 2023. During the three and nine months ended September 30, 2022, 15,743,174 warrants were granted and 3,935,793 warrants vested.

Restricted Stock

In 2019, the Company permitted the purchase of 142,908 shares of restricted stock prior to vesting by an employee of the Company. These shares are restricted and subject to repurchase by the Company until the conditions for vesting are met. Upon termination of employment of the restricted stockholder, the Company has the right to repurchase, at the original purchase price, any unvested restricted shares. Accordingly, the Company has recorded the proceeds from the issuance of restricted stock as a liability on the Consolidated Balance Sheets as a component of other current liabilities, given the implicit repurchase feature. As of December 31, 2022, the Company has recognized a restricted stock liability of approximately $0.1 million as a component of accrued expenses. As of September 30, 2023, the Company has recognized an immaterial amount of restricted stock liability as a component of accrued expenses. The Company reclassified an immaterial amount of restricted stock liability to stockholders’ deficit upon vesting of restricted shares during the three months ended September 30, 2023 and December 31, 2022, respectively. As of September 30, 2023, all restricted stock has been fully vested.
The following is a summary of the non-vested restricted common stock activity during the nine months ended September 30, 2023:
Number of SharesWeighted Average Grant Date
Fair Value
Unvested and outstanding at January 1, 2023
26,795 $2.84 
Granted—
Vested(26,795)$2.84 
Unvested and outstanding at September 30, 2023
— $— 
The aggregate fair value of restricted stock that vested was $0.7 million and $0.9 million during the nine months ended September 30, 2023 and 2022, respectively.

Stock Purchase and Investment Option

On July 28, 2022, the Company entered into a stock purchase agreement in connection with the collaboration agreement and strategic partnership with Shopify. Under the stock purchase agreement, the Company issued and sold 2,951,846 shares of common stock to Shopify at a price of $33.88 per share. The stock purchase agreement also granted Shopify an Investment Option, which allows Shopify to purchase an additional 15,743,174 shares of common stock at a purchase price of $88.93 per share. The Investment Option is exercisable at any time at Shopify’s option until July 28, 2030. The Company determined that the $100.0 million purchase price represents the fair value of the common stock and Investment Option issued to Shopify since the transaction occurred at arm’s length and was not compensatory.

The gross proceeds of $100.0 million were allocated to the common stock and Investment Option based on the relative fair value of each instrument, resulting in $69.4 million being allocated to the common stock and $30.6 million allocated to the Investment Option. The Company incurred $0.4 million of issuance costs which were allocated to the common stock and Investment Option based on their relative fair values. The proceeds allocated to the Investment Option, net of issuance costs, are included as a component of additional paid-in capital within the Consolidated Balance Sheets.