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Fair Value Measurements
12 Months Ended
Dec. 31, 2021
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 table sets forth our financial assets as of December 31, 2021 and 2020 that are measured at fair value on a recurring basis during the period:

 

 

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(1)

 

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

 

 

 

(1)

In the third quarter of 2021, 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 (which was subject to short-term lock-up restrictions as of December 31, 2021).

 

 

December 31, 2020

 

 

Cost or

Amortized Cost

 

 

Gross

Unrealized

Gains

 

 

Gross

Unrealized

Losses

 

 

Total Estimated

Fair Value

 

 

(in thousands)

 

Cash

$

464,006

 

 

$

 

 

$

 

 

$

464,006

 

Level 1 securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government securities

 

1,272,125

 

 

 

122

 

 

 

(21

)

 

 

1,272,226

 

U.S. government agency securities

 

245,055

 

 

 

8

 

 

 

(24

)

 

 

245,039

 

Level 2 securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt securities

 

81,158

 

 

 

1

 

 

 

(18

)

 

 

81,141

 

Commercial paper

 

425,861

 

 

 

 

 

 

 

 

 

425,861

 

Certificates of deposit

 

49,267

 

 

 

 

 

 

 

 

 

49,267

 

Total

$

2,537,472

 

 

$

131

 

 

$

(63

)

 

$

2,537,540

 

 

We held an investment in a publicly traded company with a carrying value of $193.2 million as of December 31, 2021, recorded as a marketable security. We recorded $122.1 million in unrealized gains related to this investment. Unrealized gains are included within other income (expense), net on the consolidated statements of operations.

Gross unrealized losses were not material as of December 31, 2021 and December 31, 2020, respectively. As of December 31, 2021, we considered any decreases in fair value on our marketable securities to be driven by factors other than credit risk, including market risk. As of December 31, 2021, $283.1 million of our total $1.5 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 discount and issuance costs on our consolidated balance sheets and present that fair value for disclosure purposes only. As of December 31, 2021, the fair value of the 2027 Notes, the 2025 Notes and the 2026 Notes was $1.1 billion, $650.1 million and $1.9 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.