Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As of June 30, 2026, there has been no material change in our exposure to market risk from what was previously disclosed in our Annual Report, except for the equity price risk as set forth below:
In connection with our Conversion Election (as defined above), the embedded conversion option of the 3.75% Convertible Notes is required to be measured at fair value on the consolidated balance sheet at June 30, 2026 and through the date of conversion with changes in fair value being recognized as gains or losses in the consolidated statements of operations. The fair value of the embedded conversion option derivative liability is dependent on, among other things, the price and volatility of our common stock and will generally increase or decrease as the market price of our common stock changes. As of June 30, 2026, based on our stock price as of that date of $158, with all other factors remaining constant, a 10% change in the price of our common stock would cause an approximately $90 million increase or decrease in the value of the embedded conversion option derivative liability, with a corresponding gain or loss on derivative remeasurement in the consolidated statements of operations.
Additionally, see Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources for a discussion regarding additional equity price risk relating to the settlement of the redemption and associated conversions of the 3.75% Convertible Notes.
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