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FAIR VALUE MEASUREMENTS
 9 Months Ended
Sep. 30, 2021
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS
Fair value accounting is applied for all financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. At September 30, 2021 and December 31, 2020, the carrying amount of accounts receivable, other current assets, accounts payable, and accrued and other current liabilities approximated their estimated fair value due to their relatively short maturities. There were no assets or liabilities classified as Level 3 as of September 30, 2021.
The following table provides the financial instruments measured at fair value (in thousands):
September 30, 2021
Level 1Level 2Level 3Total
Assets
Cash equivalents:
Money market fund
$3,787$— $—$3,787
Debt securities
Corporate debt securities— 34,363 — 34,363
Commercial paper— 20,740 — 20,740
U.S. government bonds— 80,840 — 80,840
Certificate of deposits— 24,523 — 24,523
Other— 10,329 — 10,329 
Total financial assets$3,787 $170,795 $— $174,582 

December 31, 2020
Level 1Level 2Level 3Total
Assets
Cash equivalents:
Money market fund
$67 $— $— $67 
Liabilities
Convertible preferred stock warrant liability
$— $— $95,342 $95,342 
The Company’s money market funds are classified as Level 1 because they are valued using quoted market prices. The Company’s short-term investments consist of available-for-sale securities and are classified as Level 2 because their value is based on valuations using significant inputs derived from or corroborated by observable market data. The convertible preferred stock warrant liabilities are defined as Level 3 in the fair value hierarchy as the valuations are based on significant unobservable inputs, which reflect the Company’s own assumptions incorporated in valuation techniques used to determine fair value; further discussion of these assumptions is set forth below. There were no transfers into or out of Level 3 of the fair value hierarchy during the periods presented.
Convertible Preferred Stock Warrant Liabilities
As discussed in Note 9 - Warrants, upon effectiveness of the Merger, substantially all of the outstanding convertible preferred stock warrants were converted into shares of Class A common stock of Stem. As such, the associated warrant liability was reclassified to additional paid-in-capital upon the Merger and was no longer an outstanding Level 3 financial instrument as of September 30, 2021. The fair value of the convertible preferred stock warrants as of September 30, 2020 was determined using the Black-Scholes method as well as a discount for lack of marketability. Black-Scholes inputs used to value the warrants are based on information from purchase agreements and within valuation reports prepared by an independent third party for the Company. Inputs include exercise price, volatility, fair value of common or preferred stock, expected dividend rate and risk-free interest rate.
The key assumptions used for the valuation of the preferred stock warrant liabilities upon remeasurement were as follows:
Nine Months Ended
September 30,
2020
Volatility65.0 %
Risk-free interest rate0.1 %
Expected term (in years)1.8
Dividend yield— %
Discount for lack of marketability36.5 %
The following table presents the changes in the liability for the Company’s warrants during the nine months ended September 30, 2021 (in thousands):
Warrant Liability
Balance as of December 31, 2020$95,342 
Changes in estimated fair value(1,303)
Assumption of warrant liability upon Merger303,221 
Conversion of warrants upon Merger(59,442)
Exchange of warrants (168,647)
Exercised warrants(169,171)
Balance as of September 30, 2021$—