Problem
On July 30, 2021, Duolingo went public via an IPO (initial public offering). The 2021 Form 10-K disclosed the IPO as follows:
On July 30, 2021, Duolingo completed its Initial Public Offering ("IPO") of 5,872 shares of its Class A common stock at a price to the public of $102.00 per share, 4,466 of which were sold by the Company and 1,406 of which were sold by certain selling stockholders, which includes the exercise in full by the underwriters of their option to purchase from the Company an additional 766 shares of the Company's Class A common stock. The gross proceeds to the Company from the IPO were $455,532, before deducting underwriting discounts and commissions and offering expenses payable by the Company. The Company did not receive any proceeds from the sale of shares of Class A common stock in the offering by the selling stockholders.
Immediately prior to the completion of the IPO, all convertible preferred stock outstanding, totaling approximately 19,074 shares, was automatically converted into an equivalent number of shares of Class B common stock on a one-to-one basis and their carrying value of $182,609 was reclassified to additional paid-in capital within stockholders' equity (deficit).
I. Did total stockholders' equity increase, decrease or remain the same as a result of the IPO of the Class A Common Shares?
II. Did total stockholders' equity increase, decrease or remain the same as a result of the conversion of all convertible preferred stock to Class B common stock?