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Cash and Cash Equivalents, Investments, and Fair Value Measurements

6 Months Ended

Jun. 30, 2022

Cash and Cash Equivalents, Investments, and Fair Value Measurements

3. Cash and Cash Equivalents, Investments and Fair Value Measurements

Investments

As of June 30, 2022 and December 31, 2021, all of Wayfair’s marketable securities, which primarily consisted of corporate bonds and other government obligations that are priced at fair value, were classified as available-for-sale investments. Wayfair did not have any realized gains nor losses during the three and six months ended June 30, 2022 or 2021.

During the three and six months ended June 30, 2022 and 2021, Wayfair did not recognize any credit losses related to its available-for-sale debt securities. Further, as of June 30, 2022 and December 31, 2021, Wayfair did not record an allowance for credit losses related to its available-for-sale debt securities.

The following tables present details of Wayfair’s investment securities as of June 30, 2022 and December 31, 2021:


	June 30, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(in millions)
Short-term:
Investment securities	$	646	$	—	$	(2)	$	644


	December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(in millions)
Short-term:
Investment securities	$	693	$	—	$	—	$	693

Fair Value Measurements

Wayfair's financial assets and liabilities are measured at fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The three levels of inputs used to measure fair value are as follows:

▪Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities

▪Level 2—Unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable or can be corroborated by observable market data for substantially the full-term of the asset or liability

▪Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the asset or liability

This hierarchy requires Wayfair to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. We classify our cash equivalents within Level 1 because we value these investments using

quoted market prices. The fair value of our Level 1 financial assets is based on quoted market prices of the identical underlying security. We classify short-term investments within Level 2 because unadjusted quoted prices for identical or similar assets in markets are not active. None of our cash and cash equivalents or investments are classified as Level 3.

The following tables set forth the fair value of Wayfair’s financial assets measured at fair value on a recurring basis as of June 30, 2022 and December 31, 2021:


	June 30, 2022
	Level 1		Level 2		Level 3		Total
	(in millions)
Cash and cash equivalents:
Cash	$	437	$	—	$	—	$	437
Cash equivalents	657		—		—		657
Total cash and cash equivalents	1,094		—		—		1,094
Short-term investments:
Investment securities	—		644		—		644




Total	$	1,094	$	644	$	—	$	1,738


	December 31, 2021
	Level 1		Level 2		Level 3		Total
	(in millions)
Cash and cash equivalents:
Cash	$	906	$	—	$	—	$	906
Cash equivalents	800		—		—		800
Total cash and cash equivalents	1,706		—		—		1,706
Short-term investments:
Investment securities	—		693		—		693




Total	$	1,706	$	693	$	—	$	2,399

- Definition

Disclosure of marketable securities and 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.

+ References + Details