Fair Value Measurements

12 Months Ended

Dec. 31, 2021

4.	FAIR VALUE MEASUREMENTS

The following summarizes the Company’s financial assets measured and recorded at fair value on a recurring basis as of December 31, 2020 and 2021:


			Fair Value Measurements at Reporting Date Using
	As of December 31, 2020		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	( RMB in thousands)

Short-term investments		1,006,245		—		1,006,245		—

		1,006,245		—		1,006,245		—


			Fair Value Measurements at Reporting Date Using
	As of December 31, 2021		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	( RMB in thousands)
Short-term investments		4,568,346		—		4,568,346		—

		4,568,346		—		4,568,346		—

The Company measured the fair value of its warrant liabilities on a recurring basis using significant unobservable (Level 3) inputs as of December 31, 2020.

The Company estimated the fair values of the Series B4 Warrant using the Black-Scholes Option Pricing Model with the assistance of an independent third-party valuation firm using the corresponding inputs:


	As of December 31, 2020
	Series B4 Warrant
Expected volatility		51.35	%
Risk-free interest rate		0.09	%
Remaining contractual life		0.62
Fair value of the underlying preferred shares		US$6.50
Warrant fair value		US$118.58

The determination of the fair value of the Company’s preferred shares requires complex and subjective judgments to be made regarding the cash flow forecasts and the weighted average cost of capital and the discount for lack of marketability applied to the projected cash flows. If different estimates and assumptions had been used, the fair values of the preferred shares could be significantly different and the fair value of the warrant liabilities may materially differ from the recognized amount.

The Company recognized a loss from the increase in the fair value of the warrant liabilities of RMB100.7 million, a gain from the decrease in the fair value of the warrant liabilities of RMB11.5 million and a loss from the increase in the fair value of the warrant liabilities of RMB44.5 million (US$7.0 million) for the years ended December 31, 2019, 2020 and 2021, respectively. Such amounts were recorded in “Changes in fair value of warrant liabilities” in the consolidated statements of comprehensive loss.

The following table presents a reconciliation of the warrant liabilities measured at fair value on a recurring basis using Level 3 unobservable inputs for the years ended December 31, 2020 and 2021:


	Warrant liabilities
	RMB
	(in thousands)
Balance as of December 31, 2019		161,462
Fair value change		(11,450	)
Foreign exchange translation		(8,807	)
Exercise of EatTogether Warrant (Note 17)		(33,045	)

Balance as of December 31, 2020		108,160


	Warrant liabilities
	RMB
	(in thousands)
Balance as of December 31, 2020		108,160
Fair value change		44,457
Foreign exchange translation		536
Exercise of Series B4 Warrant (Note 17)		(153,153	)

Balance as of December 31, 2021		—

Balance as of December 31, 2021 (US$)		—

In April 2020, the Founder exercised the EatTogether Warrant and received 6,664,000 Series B4-1 redeemable convertible preferred shares (Note 17). In March 2021, the holder exercised the Series B4 Warrant and received 6,989,750 Series B4 redeemable convertible preferred shares (Note 17). There were no warrants outstanding as of December 31, 2021 and therefore, there were no financial liabilities measured at fair value on a recurring basis.

The Company did

not

transfer any financial assets or

liabilities

in or out of Level 3 during the years ended December 31, 2020 and 2021. The Group had no financial assets and liabilities measured and recorded at fair value on a

non-recurring

basis as of December 31, 2020 and 2021.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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