Moderna Inc. (NASDAQ:MRNA)

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Moderna Inc., effective income tax rate (EITR) reconciliation

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Federal statutory tax rate	21.00%	21.00%	21.00%	21.00%	21.00%
Change in valuation allowance	-52.60%	0.00%	-5.40%	-47.40%	-33.00%
Foreign-derived intangible income	0.20%	-7.40%	-4.80%	0.00%	-0.20%
Stock-based compensation windfall	2.40%	-1.60%	-2.60%	19.80%	0.00%
Federal research and development credits	4.60%	-0.50%	-0.70%	3.80%	2.50%
State taxes, net of federal benefits	5.70%	0.40%	0.50%	3.60%	7.90%
Non-deductible items	-0.40%	0.00%	0.00%	-0.80%	1.60%
Other	-0.50%	0.80%	0.10%	-0.30%	0.20%
Effective tax rate	-19.60%	12.70%	8.10%	-0.30%	0.00%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

The effective income tax rate exhibits extreme volatility between 2020 and 2023, diverging substantially from the constant federal statutory rate of 21.00%. The analysis reveals that the tax burden is not driven by statutory obligations but by significant discrete adjustments and valuation changes.

Valuation Allowance Volatility: Changes in valuation allowances serve as the primary driver of the effective tax rate. Substantial negative adjustments occurred in 2019 (-33.00%), 2020 (-47.40%), and 2023 (-52.60%), which significantly offset statutory liabilities and contributed to negative effective tax rates in 2020 and 2023.
Effective Tax Rate Trajectory: A non-linear trend is observed, with the rate moving from -0.30% in 2020 to a peak of 12.70% in 2022, before dropping sharply to -19.60% in 2023. This indicates a high degree of sensitivity to non-recurring tax items rather than stable operational profitability.
Foreign-Derived Intangible Income (FDII): FDII provided consistent tax relief from 2019 through 2022, with the most significant reduction occurring in 2022 at -7.40%. However, this benefit effectively disappeared in 2023, where the impact shifted to a negligible 0.20%.
Stock-Based Compensation Impact: Stock-based compensation created a significant upward pressure on the tax rate in 2020, contributing 19.80% to the reconciliation. This effect reversed in 2021 and 2022, becoming slightly positive again at 2.40% in 2023.
Secondary Tax Influences: State taxes and federal research and development credits provided marginal fluctuations. State taxes peaked at 7.90% in 2019 before declining and rebounding to 5.70% in 2023. R&D credits remained relatively low, though they reached a five-year high of 4.60% in 2023.

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Moderna Inc., components of deferred tax assets and liabilities

US$ in millions

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net operating loss carryforwards	90)	59)	69)	587)	268)
Stock-based compensation	111)	68)	44)	33)	44)
Capitalized licenses, research and development and start-up costs	1,449)	704)	204)	14)	20)
Tax credit carryforwards	140)	97)	80)	99)	77)
Operating lease liabilities	154)	26)	32)	22)	27)
Financing lease liabilities	139)	135)	136)	24)	11)
Other comprehensive income	34)	106)	—)	—)	—)
Inventory reserve and capitalization	250)	86)	—)	—)	—)
Wholesaler chargebacks, discounts and fees	92)	—)	—)	—)	—)
Returns and other fees	129)	—)	—)	—)	—)
Other	90)	85)	110)	95)	61)
Deferred tax assets, gross	2,678)	1,366)	675)	874)	507)
Valuation allowance	(2,224)	(155)	(149)	(823)	(471)
Deferred tax assets, net of valuation allowance	454)	1,211)	526)	51)	37)
Right-of-use assets, financing	(106)	(117)	(119)	(12)	(3)
Right-of-use assets, operating	(160)	(26)	(31)	(20)	(25)
Property, plant and equipment	(107)	(85)	(49)	(18)	(9)
Other	(15)	(1)	(1)	(1)	—)
Deferred tax liabilities	(388)	(229)	(200)	(51)	(37)
Net deferred tax assets (liabilities)	66)	982)	326)	—)	—)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

The financial trajectory of deferred tax components reflects a transition from early-stage research and development toward large-scale commercial operations, characterized by a significant expansion in gross deferred tax assets and a subsequent sharp increase in valuation allowances.

Growth of Gross Deferred Tax Assets: Gross deferred tax assets increased exponentially from 507 million USD in 2019 to 2,678 million USD by 2023. This growth was primarily driven by capitalized licenses, research and development, and start-up costs, which rose from 20 million USD in 2019 to 1,449 million USD in 2023. Additional contributions came from stock-based compensation, which grew from 44 million USD to 111 million USD over the same period.
Valuation Allowance and Asset Realizability: A substantial shift in the realizability of tax assets occurred in 2023. While the valuation allowance remained relatively low compared to gross assets between 2021 and 2022, it surged to 2,224 million USD in 2023. This resulted in a sharp decline in net deferred tax assets, which fell from 1,211 million USD in 2022 to 454 million USD in 2023, suggesting a management assessment that a significant portion of the gross assets may not be realized in the foreseeable future.
Operational Transition and Tax Carryforwards: Net operating loss carryforwards peaked in 2020 at 587 million USD before dropping significantly to 69 million USD in 2021 and remaining low through 2023, indicating the utilization of prior losses against taxable income. Concurrently, new asset components emerged in 2022 and 2023, including inventory reserves (250 million USD) and wholesaler chargebacks, discounts, and fees (92 million USD), signaling the shift toward a commercial product lifecycle.
Deferred Tax Liabilities Expansion: Deferred tax liabilities grew steadily from 37 million USD in 2019 to 388 million USD in 2023. This increase is attributed to the expansion of the asset base, specifically in property, plant, and equipment, which rose from 9 million USD to 107 million USD, and right-of-use assets for both financing and operating leases.
Net Deferred Tax Position: The net deferred tax position experienced high volatility, peaking at 982 million USD in 2022 before contracting to 66 million USD in 2023. This convergence toward a near-neutral net position is the direct result of the massive increase in the valuation allowance offsetting the growth in gross deferred tax assets.

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Moderna Inc., deferred tax assets and liabilities, classification

US$ in millions

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
	Deferred tax assets	81)	982)	326)	—)	—)
	Deferred tax liabilities	15)	—)	—)	—)	—)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

The analysis of deferred tax accounts reveals a period of significant volatility, characterized by the rapid accumulation and subsequent reduction of deferred tax assets between 2021 and 2023.

Deferred Tax Assets Trend: Deferred tax assets were not present in the records for 2019 and 2020. A balance of 326 million USD emerged in 2021, which increased substantially to 982 million USD by December 31, 2022. This peak was followed by a sharp contraction in 2023, where the asset balance fell to 81 million USD.
Deferred Tax Liabilities Emergence: Deferred tax liabilities remained absent from the financial data from 2019 through 2022. A deferred tax liability of 15 million USD was first recorded on December 31, 2023, marking a shift in the tax liability profile.
Net Deferred Tax Position: The net deferred tax position shifted from a significant net asset of 982 million USD in 2022 to a net asset of 66 million USD in 2023. This represents a substantial decrease in the recognized future tax benefits available to the entity.

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Moderna Inc., Financial Data: Reported vs. Adjusted

Moderna Inc., adjustments to financial statements

US$ in millions

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Adjustment to Total Assets
Total assets (as reported)	18,426)	25,858)	24,669)	7,337)	1,589)
Less: Noncurrent deferred tax assets, net	81)	982)	326)	—)	—)
Total assets (adjusted)	18,345)	24,876)	24,343)	7,337)	1,589)
Adjustment to Total Liabilities
Total liabilities (as reported)	4,572)	6,735)	10,524)	4,775)	415)
Less: Noncurrent deferred tax liabilities, net	15)	—)	—)	—)	—)
Total liabilities (adjusted)	4,557)	6,735)	10,524)	4,775)	415)
Adjustment to Stockholders’ Equity
Stockholders’ equity (as reported)	13,854)	19,123)	14,145)	2,561)	1,175)
Less: Net deferred tax assets (liabilities)	66)	982)	326)	—)	—)
Stockholders’ equity (adjusted)	13,788)	18,141)	13,819)	2,561)	1,175)
Adjustment to Net Income (loss)
Net income (loss) (as reported)	(4,714)	8,362)	12,202)	(747)	(514)
Add: Deferred income tax expense (benefit)	901)	(578)	(296)	—)	(1)
Net income (loss) (adjusted)	(3,813)	7,784)	11,906)	(747)	(515)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

The financial trajectory from 2019 to 2023 is characterized by a period of rapid balance sheet expansion followed by a contraction in 2023. The removal of deferred taxes reveals a systemic divergence between reported and adjusted financial positions, particularly during the years of peak profitability.

Impact on Total Assets and Equity: Between 2019 and 2020, reported and adjusted assets remained identical. However, starting in 2021, a gap emerged where adjusted assets were consistently lower than reported figures. This divergence peaked in 2022, with reported assets of 25,858 million USD compared to adjusted assets of 24,876 million USD, representing a reduction of 982 million USD. A corresponding reduction is observed in stockholders' equity for the same period, confirming that the adjustments primarily target deferred tax assets. By 2023, the variance narrowed significantly, with adjusted equity remaining only 66 million USD below reported equity.
Analysis of Net Income Adjustments: The removal of deferred taxes significantly alters the perceived profitability of the entity. In 2021 and 2022, adjusted net income was lower than reported net income, with the most substantial decrease occurring in 2022, where adjusted income dropped by 578 million USD. Conversely, in 2023, the adjustment resulted in a reduction of the reported net loss. The reported loss of 4,714 million USD was adjusted to a loss of 3,813 million USD, indicating that the removal of deferred tax accounting mitigated the reported negative impact on the bottom line during the loss-making year.
Liabilities and Balance Sheet Stability: Total liabilities remained largely unaffected by the removal of deferred taxes through 2022. A marginal adjustment occurred in 2023, where adjusted liabilities were 15 million USD lower than reported liabilities. This suggests that the deferred tax adjustments are heavily concentrated in asset and equity accounts rather than liability obligations.
Overall Financial Trend: The data indicates a sharp escalation in the company's financial scale from 2019 to 2022, with total assets growing from 1,589 million USD to a peak of 25,858 million USD. The subsequent decline in 2023 across assets and equity, coupled with a return to net losses, suggests a transition from a high-growth phase to a period of financial consolidation or contraction. The influence of deferred taxes was most pronounced during the transition to high profitability (2021-2022) and the subsequent return to losses (2023).

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Moderna Inc., Financial Ratios: Reported vs. Adjusted

Moderna Inc., adjusted financial ratios

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net Profit Margin
Reported net profit margin	-70.66%	45.36%	69.04%	-373.77%	—
Adjusted net profit margin	-57.16%	42.22%	67.36%	-373.77%	—
Total Asset Turnover
Reported total asset turnover	0.36	0.71	0.72	0.03	0.00
Adjusted total asset turnover	0.36	0.74	0.73	0.03	0.00
Financial Leverage
Reported financial leverage	1.33	1.35	1.74	2.86	1.35
Adjusted financial leverage	1.33	1.37	1.76	2.86	1.35
Return on Equity (ROE)
Reported ROE	-34.03%	43.73%	86.26%	-29.17%	-43.75%
Adjusted ROE	-27.65%	42.91%	86.16%	-29.17%	-43.86%
Return on Assets (ROA)
Reported ROA	-25.58%	32.34%	49.46%	-10.18%	-32.34%
Adjusted ROA	-20.78%	31.29%	48.91%	-10.18%	-32.42%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

The financial performance between 2019 and 2023 is characterized by extreme volatility, particularly in profitability and return metrics. A significant pivot occurred between 2020 and 2021, shifting from deep losses to high margins, followed by a substantial decline returning to negative territory by 2023. The removal of deferred taxes reveals a consistent pattern where adjusted figures slightly moderate the extremes of the reported results, particularly during periods of loss.

Profitability Margins: The reported net profit margin experienced a drastic transition from -373.77% in 2020 to a peak of 69.04% in 2021, before declining to -70.66% in 2023. The adjusted net profit margin follows an identical trajectory but shows a notable divergence in 2023, where the adjusted margin of -57.16% is significantly less negative than the reported figure. This suggests that deferred tax accounting amplified the reported losses in the final period of the analysis.
Asset Utilization and Efficiency: Total asset turnover remained negligible in 2020 at 0.03 but surged to 0.72 in 2021 and 0.71 in 2022. By 2023, this ratio fell to 0.36. Adjusted total asset turnover figures remained closely aligned with reported values, showing a marginal increase in 2021 and 2022, indicating that deferred tax adjustments have a minimal impact on efficiency ratios compared to profitability metrics.
Financial Leverage: Financial leverage peaked in 2020 at 2.86 before trending downward to 1.33 by 2023. The adjusted financial leverage mirrors this trend almost exactly, with only negligible differences observed in 2021 and 2022. This indicates a strategic reduction in leverage or an increase in the equity base relative to total assets over the five-year period.
Returns on Equity and Assets: Both Reported ROE and ROA exhibit a bell-shaped trend, peaking in 2021 at 86.26% and 49.46% respectively, and crashing to negative values in 2023. The removal of deferred taxes provides a cushioning effect on these returns during the 2023 downturn; the adjusted ROE of -27.65% and adjusted ROA of -20.78% are less severe than their reported counterparts of -34.03% and -25.58%. This implies that the reported decline in returns is partially driven by deferred tax expenses or adjustments rather than purely operational losses.

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	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Net income (loss)	(4,714)	8,362)	12,202)	(747)	(514)
Net product sales	6,671)	18,435)	17,675)	200)	—)
Profitability Ratio
Net profit margin¹	-70.66%	45.36%	69.04%	-373.77%	—
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income (loss)	(3,813)	7,784)	11,906)	(747)	(515)
Net product sales	6,671)	18,435)	17,675)	200)	—)
Profitability Ratio
Adjusted net profit margin²	-57.16%	42.22%	67.36%	-373.77%	—

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

¹ Net profit margin = 100 × Net income (loss) ÷ Net product sales
= 100 × -4,714 ÷ 6,671 = -70.66%

² Adjusted net profit margin = 100 × Adjusted net income (loss) ÷ Net product sales
= 100 × -3,813 ÷ 6,671 = -57.16%

The financial trajectory between 2019 and 2023 is characterized by extreme volatility in profitability, shifting from substantial losses to significant gains before returning to a deficit. A period of rapid expansion in net income peaked in 2021, followed by a steady decline and a return to negative earnings in the most recent fiscal year.

Adjusted Net Income Trends: Adjusted net income transitioned from losses of 515 million USD in 2019 and 747 million USD in 2020 to a peak of 11.91 billion USD in 2021. This valuation decreased to 7.78 billion USD in 2022 and ultimately reversed to a loss of 3.81 billion USD by December 31, 2023.
Adjusted Net Profit Margin Volatility: The adjusted net profit margin experienced a drastic recovery from -373.77% in 2020 to a high of 67.36% in 2021. This was followed by a contraction to 42.22% in 2022 and a sharp decline to -57.16% in 2023, reflecting a significant reduction in the efficiency of converting revenue into profit.
Divergence Between Reported and Adjusted Figures: While reported and adjusted figures remained nearly identical during the initial loss periods of 2019 and 2020, a notable divergence emerged in 2023. In that year, the adjusted net loss of 3.81 billion USD was less severe than the reported net loss of 4.71 billion USD. This variance is further reflected in the margins, where the adjusted net profit margin of -57.16% provided a more tempered result compared to the reported margin of -70.66%.

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	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Net product sales	6,671)	18,435)	17,675)	200)	—)
Total assets	18,426)	25,858)	24,669)	7,337)	1,589)
Activity Ratio
Total asset turnover¹	0.36	0.71	0.72	0.03	0.00
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Net product sales	6,671)	18,435)	17,675)	200)	—)
Adjusted total assets	18,345)	24,876)	24,343)	7,337)	1,589)
Activity Ratio
Adjusted total asset turnover²	0.36	0.74	0.73	0.03	0.00

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

¹ Total asset turnover = Net product sales ÷ Total assets
= 6,671 ÷ 18,426 = 0.36

² Adjusted total asset turnover = Net product sales ÷ Adjusted total assets
= 6,671 ÷ 18,345 = 0.36

A period of rapid asset expansion followed by a significant contraction is evident between 2019 and 2023. Total assets grew exponentially from 1,589 million USD in 2019 to a peak of 25,858 million USD in 2022, before declining to 18,426 million USD by the end of 2023. This trajectory indicates a massive scaling of the balance sheet followed by a recent reduction in the asset base.

Adjusted Total Asset Turnover Trend: The adjusted total asset turnover ratio experienced a dramatic increase from 0.03 in 2020 to a peak of 0.74 in 2022. This surge reflects a substantial improvement in the efficiency of asset utilization to generate revenue during the 2021-2022 period. However, this efficiency declined sharply in 2023, with the ratio falling to 0.36, suggesting a decrease in revenue generation relative to the remaining asset base.
Comparative Analysis of Reported and Adjusted Metrics: The variance between reported and adjusted total assets remains minimal throughout the analyzed period. In 2021 and 2022, the adjusted total asset turnover was slightly higher than the reported ratio (0.73 vs 0.72 and 0.74 vs 0.71, respectively). This indicates that the adjustments made to the asset base slightly enhanced the perceived efficiency of asset utilization during the peak operational years.
Asset Utilization Dynamics: The transition from a near-zero turnover in 2020 to a high of 0.74 in 2022 illustrates a rapid shift from a developmental or investment phase to a high-revenue operational phase. The subsequent drop to 0.36 in 2023 demonstrates a significant volatility in asset productivity, mirroring the overall volatility observed in the total asset values.

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	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Total assets	18,426)	25,858)	24,669)	7,337)	1,589)
Stockholders’ equity	13,854)	19,123)	14,145)	2,561)	1,175)
Solvency Ratio
Financial leverage¹	1.33	1.35	1.74	2.86	1.35
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted total assets	18,345)	24,876)	24,343)	7,337)	1,589)
Adjusted stockholders’ equity	13,788)	18,141)	13,819)	2,561)	1,175)
Solvency Ratio
Adjusted financial leverage²	1.33	1.37	1.76	2.86	1.35

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

¹ Financial leverage = Total assets ÷ Stockholders’ equity
= 18,426 ÷ 13,854 = 1.33

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted stockholders’ equity
= 18,345 ÷ 13,788 = 1.33

The financial trajectory between 2019 and 2023 is characterized by a period of rapid balance sheet expansion followed by a contraction. Total assets grew from 1,589 million US$ in 2019 to a peak of 25,858 million US$ in 2022, before decreasing to 18,426 million US$ by the end of 2023. This expansion was closely mirrored by stockholders' equity, which rose from 1,175 million US$ in 2019 to a peak of 19,123 million US$ in 2022, before declining to 13,854 million US$ in 2023.

Financial Leverage Trends: Reported financial leverage experienced a significant spike in 2020, reaching 2.86, which indicates a temporary increase in the reliance on liabilities relative to equity. Following this peak, the ratio declined steadily over the subsequent three years, reaching 1.33 by December 31, 2023, effectively returning to the baseline level of 1.35 observed in 2019.
Adjusted Financial Leverage Analysis: The adjusted financial leverage ratio follows a nearly identical trajectory to the reported ratio, peaking at 2.86 in 2020 and concluding at 1.33 in 2023. Minor variances are observed in 2021 and 2022, where the adjusted leverage was slightly higher than the reported leverage (1.76 versus 1.74 and 1.37 versus 1.35, respectively). These marginal differences suggest that the adjustments made to assets and equity for tax purposes had a negligible impact on the company's overall leverage profile.
Balance Sheet Stability: The parallel movements of reported and adjusted total assets and stockholders' equity indicate a consistent relationship between the two metrics across the five-year period. The convergence of reported and adjusted leverage ratios by 2023 reflects a stabilization in the capital structure following the volatility observed during the period of maximum growth.

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	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Net income (loss)	(4,714)	8,362)	12,202)	(747)	(514)
Stockholders’ equity	13,854)	19,123)	14,145)	2,561)	1,175)
Profitability Ratio
ROE¹	-34.03%	43.73%	86.26%	-29.17%	-43.75%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income (loss)	(3,813)	7,784)	11,906)	(747)	(515)
Adjusted stockholders’ equity	13,788)	18,141)	13,819)	2,561)	1,175)
Profitability Ratio
Adjusted ROE²	-27.65%	42.91%	86.16%	-29.17%	-43.86%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

¹ ROE = 100 × Net income (loss) ÷ Stockholders’ equity
= 100 × -4,714 ÷ 13,854 = -34.03%

² Adjusted ROE = 100 × Adjusted net income (loss) ÷ Adjusted stockholders’ equity
= 100 × -3,813 ÷ 13,788 = -27.65%

The financial trajectory from 2019 to 2023 is characterized by extreme volatility in profitability and equity growth, resulting in significant fluctuations in both reported and adjusted return on equity (ROE).

Profitability and Equity Trends: A period of initial losses in 2019 and 2020 was followed by a substantial surge in net income, peaking in 2021 with reported net income of 12,202 million US$. This surge coincided with a rapid expansion of stockholders' equity, which grew from 1,175 million US$ in 2019 to a peak of 19,123 million US$ in 2022. However, 2023 marked a reversal, with reported net losses returning to 4,714 million US$ and a contraction in equity to 13,854 million US$.
Analysis of Adjusted ROE: The adjusted ROE mirrors the trend of the reported ROE but exhibits less volatility during the most recent downturn. After starting at -43.86% in 2019, the adjusted ROE reached a peak of 86.16% in 2021. While the reported ROE fell to -34.03% by 2023, the adjusted ROE showed a slightly more tempered decline to -27.65%, suggesting that adjustments to net income and equity mitigated the impact of the 2023 losses on the return metric.
Comparative Variance Between Reported and Adjusted Metrics: Between 2019 and 2020, the variance between reported and adjusted figures was negligible. A more pronounced divergence emerged during the high-profit years of 2021 and 2022, and again in 2023. Specifically, in 2023, the adjusted net loss was 3,813 million US$, which is approximately 901 million US$ lower than the reported net loss, contributing to the variance observed in the final ROE calculations.
Overall Return on Equity Cycle: The ROE cycle demonstrates a sharp transition from negative returns to an exceptional peak in 2021, followed by a steady decline in 2022 and a return to negative territory in 2023. This pattern indicates a period of extraordinary capital efficiency followed by a significant correction in profitability relative to the company's equity base.

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	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Net income (loss)	(4,714)	8,362)	12,202)	(747)	(514)
Total assets	18,426)	25,858)	24,669)	7,337)	1,589)
Profitability Ratio
ROA¹	-25.58%	32.34%	49.46%	-10.18%	-32.34%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income (loss)	(3,813)	7,784)	11,906)	(747)	(515)
Adjusted total assets	18,345)	24,876)	24,343)	7,337)	1,589)
Profitability Ratio
Adjusted ROA²	-20.78%	31.29%	48.91%	-10.18%	-32.42%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

¹ ROA = 100 × Net income (loss) ÷ Total assets
= 100 × -4,714 ÷ 18,426 = -25.58%

² Adjusted ROA = 100 × Adjusted net income (loss) ÷ Adjusted total assets
= 100 × -3,813 ÷ 18,345 = -20.78%

The financial trajectory from 2019 to 2023 is characterized by extreme volatility in both profitability and asset utilization, reflecting a period of rapid expansion followed by a significant correction.

Net Income Performance: Initial fiscal years showed operational losses, with reported net losses of 514 million USD in 2019 and 747 million USD in 2020. A sharp reversal occurred in 2021, with reported net income peaking at 12,202 million USD, before declining to 8,362 million USD in 2022 and returning to a loss of 4,714 million USD in 2023. Adjusted net income follows a nearly identical pattern, though it indicates a slightly reduced loss of 3,813 million USD for the 2023 period.
Asset Base Growth and Contraction: Total assets experienced an aggressive upward trend, growing from 1,589 million USD in 2019 to a peak of 25,858 million USD in 2022. This expansion indicates a massive accumulation of resources during the 2020-2022 window. A contraction is evident in 2023, where reported total assets decreased to 18,426 million USD.
Analysis of Return on Assets (ROA): The reported ROA demonstrates extreme fluctuations, moving from -32.34% in 2019 to a peak of 49.46% in 2021. Despite a moderate decline to 32.34% in 2022, the ratio plummeted to -25.58% by the end of 2023. The adjusted ROA mirrors this volatility but suggests a slightly more tempered outcome during the most recent loss period, recording -20.78% in 2023.
Reported vs. Adjusted Variance: The divergence between reported and adjusted ROA is minimal during the loss years of 2019 and 2020. However, during the peak profitability years of 2021 and 2022, the adjusted ROA was consistently lower than the reported ROA. In 2023, the relationship inverted, with the adjusted ROA being less negative than the reported figure, indicating that the adjustments applied to net income and assets had a moderating effect on the reported loss.

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