Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Interest Rate and Market Price Risk
Our cash, cash equivalents, and short-term investments primarily consist of cash on hand and investments in money market instruments, United States Treasury securities, commercial paper, corporate bonds, certificates of deposit, and term deposits. We do not enter into investments for trading or speculative purposes. However, some of our investments are exposed to market risk due to fluctuations in interest rates which may affect our interest income and the fair market value of our investments. Due to the short-term nature of our investment portfolio, we do not believe a hypothetical 100 basis point increase or decrease in interest rates would have a material effect on the fair market value of our portfolio. See Note 6 "Fair Value Measurements" to our consolidated financial statements included in this Form 10-K for more information on cash, cash equivalents, and short-term investments.
While we are exposed to interest rate risk in connection with borrowings under the ABL Facility, which bears interest at floating rates, as of December 31, 2025 there were no outstanding cash borrowings under the ABL Facility. Additionally, while there is no exposure to interest expense associated with our outstanding debt given that it bears fixed rates of interest, the fair value of our outstanding debt would be impacted as interest rates change, generally increasing as interest rates fall and decreasing as interest rates rise.
The fair value of our Green Convertible Notes is also subject to market price risk due to their conversion features and can be affected when the market price of our Class A common stock fluctuates. Their fair value will generally increase as our Class A common stock price increases and will generally decrease as our Class A common stock price decreases. As we carry the Green Convertible Notes at face value less unamortized discount on our consolidated balance sheets, any fair value fluctuations are presented for required disclosure purposes only but do not impact our financial position, cash flows, or results of operations. See Note 10 “Debt” to our consolidated financial statements included in this Form 10-K for more information our outstanding debt.
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