14. NET INCOME (LOSS) PER SHARE
The Company computes basic and diluted earnings per share amounts based upon net income (loss) for the periods presented. Basic net income (loss) per share is computed using the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed using the sum of the weighted average number of common shares outstanding during the period including the effect of outstanding dilutive securities.
The Company applies the two-class method to calculate its basic and diluted net income (loss) per share as the Company has issued shares of restricted common stock that meet the definition of participating securities. The two-class method is an earnings allocation formula that treats a participating security as having rights to earnings that otherwise would have been available to common stockholders. The Company’s participating securities contractually entitle the holders of such shares to participate in dividends; but do not contractually require the holders of such shares to participate in losses of the Company. Accordingly, in periods in which the Company reports a net loss, diluted net loss per share is the same as basic net loss per share, because dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.
The following table sets forth the computation of basic and diluted net income (loss) per share (in thousands, except share and per share data):
Three months ended March 31, | ||||||
2023 | 2022 | |||||
Net income (loss) |
| $ | (82,551) |
| $ | 20,726 |
Less: income allocable to participating securities | — | (692) | ||||
Income (loss) allocable to common shares | $ | (82,551) | $ | 20,034 | ||
Add back: undistributed earnings allocable to participating securities | — | 692 | ||||
Less: undistributed earnings reallocated to participating securities | — | (663) | ||||
Numerator for diluted earnings per share | $ | (82,551) | $ | 20,063 | ||
Basic weighted average common shares outstanding | 480,010,594 | 470,627,083 | ||||
Effect of dilutive securities | — | 21,165,069 | ||||
Diluted weighted-average common shares outstanding | 480,010,594 | 491,792,152 | ||||
Net income (loss) per share, basic | $ | (0.17) | $ | 0.04 | ||
Net income (loss) per share, diluted | $ | (0.17) | $ | 0.04 | ||
The Company’s potentially dilutive securities include Warrants, Earn-Out Shares, options to purchase common stock, restricted stock units and unvested restricted common stock. These potentially dilutive securities have been excluded from the computation of diluted net loss per share for the three months ended March 31, 2023, as the effect would be to reduce the net loss per share.
The Company excluded the following potential shares of common stock, presented based on amounts outstanding at each period end, from the computation of diluted net income (loss) per share for the periods indicated because including them would have had an anti-dilutive effect:
Three months ended March 31, | ||||
| 2023 |
| 2022 | |
Outstanding Warrants |
| 19,733,290 |
| 19,733,290 |
Outstanding stock options |
| 40,263,297 |
| 21,596,206 |
Unvested restricted stock units | 825,707 | — | ||
Earn-Out Shares | 50,000,000 | 50,000,000 | ||
Unvested restricted stock |
| 6,527,948 |
| — |
The above information was disclosed in a filing to the SEC. To see the filing, click here.
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