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United States securities and exchange commission logo
June 27, 2022
Gaofei Wang
Chief Executive Officer
Weibo Corporation
8/F, QIHAO Plaza, No. 8 Xinyuan S. Road
Chaoyang District, Beijing 100027
People s Republic of China
Re: Weibo Corporation
Form 20-F for the
Fiscal Year Ended December 31, 2021
Filed March 10,
2022
File No. 001-36397
Dear Mr. Wang:
We have limited our review of your filing to the financial
statements and related
disclosures and have the following comments. In some of our comments, we
may ask you to
provide us with information so we may better understand your disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Form 20-F for the Fiscal Year Ended December 31, 2021
Introduction, page 1
1. Please revise your
definition of "we," "us," "our company," "the Company" or "our" to
clarify what is meant
by "consolidated affiliated entities" in China. In this regard, refer to
the named entities here
as variable interest entities (VIEs) and explain that you do not
have any equity
ownership in such entities but rather include them in your consolidated
financial statements
based solely on contractual arrangements.
2. Please revise your
definition of "China" or "PRC" to remove the exclusion of Hong Kong
and Macau.
Gaofei Wang
FirstName LastNameGaofei Wang
Weibo Corporation
Comapany
June NameWeibo Corporation
27, 2022
June 27,
Page 2 2022 Page 2
FirstName LastName
Item 3. Key Information
Our Holding Company Structure and Contractual Arrangements with Our
Consolidated VIEs
and Their Respective Individual Shareholders, page 4
3. Please revise to refrain from using terms such as we or our
when describing activities
or functions of the VIEs. In this regard, we note numerous references
to "our" and "the
Company's" VIEs throughout the filing.
4. We note your discussion regarding the risks associated with your
contractual
arrangements with the VIEs. Please disclose here, if true, that these
contracts have not
been tested in court. We also note your disclosure that PRC regulatory
authorities could
disallow the VIE structure, which could result in a material adverse
change in your
operations and the value of your ADS, or cause the value of such
securities to
significantly decline. Please revise here to clarify that the value of
your securities could
become worthless. Similarly, revise your risk factor disclosures
beginning on page 38
where you discuss your VIE structure as well as anywhere in the
related summary of the
risk factor disclosures.
5. We note your disclosure regarding the legal and operational risks
associated with being
based in or having your operations primarily in China. Please also
disclose here how
recent statements and regulatory actions by China s government have
or may impact the
company s ability to conduct its business, accept foreign
investments, or list on a U.S. or
other foreign exchange. Specifically disclose in the forepart of Item
3 how the Holding
Foreign Companies Accountable Act (HFCAA) and Accelerating HFCAA, if
enacted,
will affect your company, including the timeframes of implementation.
In addition, your
disclosure should make clear whether these risks could cause the value
of your
ADSs to become worthless.
6. We note the diagram of corporate structure on page 108. At the onset
of Part I, please
provide a diagram of the company s corporate structure, identifying
the person or
entity that owns the equity in each depicted entity. When discussing
how the
contractual agreements between the entities may be less effective than
ownership of the
VIE, revise to disclose the person(s) that hold the equity interests
in the VIEs. Disclose
the uncertainties regarding the status of the rights of the Cayman
Islands holding company
with respect to the contractual arrangements with the VIE, its
founders and owners, and
the challenges the company may face enforcing these contractual
agreements due to
legal uncertainties and jurisdictional limits.
Permissions Required from the PRC Authorities for Our Operations, page 5
7. We note your disclosure that in connection with previous issuance of
securities to foreign
investors, under current PRC laws, regulations and regulatory rules,
you, your PRC
subsidiaries and the VIEs are not required to obtain permissions from
the CSRC and are
not required to go through cybersecurity review by the Cyberspace
Administration of
China (CAC). Please disclose whether you relied on the opinion of
counsel in making this
Gaofei Wang
FirstName LastNameGaofei Wang
Weibo Corporation
Comapany
June NameWeibo Corporation
27, 2022
June 27,
Page 3 2022 Page 3
FirstName LastName
determination. If you did not rely on counsel, explain why you did not
consult counsel and
why you believe you do not need such permissions or approvals. Please
also describe the
consequences to you and your investors if you, your subsidiaries, or
the VIEs: (i) do not
receive or maintain any necessary permissions or approvals, (ii)
inadvertently conclude
that such permissions or approvals are not required, or (iii)
applicable laws, regulations, or
interpretations change and you are required to obtain such permissions
or approvals in the
future.
Cash and Asset Flows through Our Organization, page 6
8. Please disclose any repayments of debt financing the VIEs received
from WFOE and your
intentions to settle amounts owed under the debt financing and VIE
agreements. Quantify
any cash flows that have occurred between the holding company and its
subsidiaries and
between subsidiaries, and the direction of transfer. Please also
revise to address
restrictions and limitations on the ability of the offshore holding
company to make loans
and capital contribution to PRC subsidiaries. In addition, describe
any cash management
policies and procedures that dictate how funds are transferred within
your organization,
such as how you address any limitations on cash transfers due to PRC
regulations. Lastly,
provide cross-references to the condensed consolidating schedules and
the consolidated
financial statements.
Financial Information Related to the VIEs, page 8
9. Please address the following as it relates to your Selected Condensed
Consolidated
financial statements:
Revise to present the service fee expense paid by the VIEs to the
primary beneficiary
separately from the other costs and expenses of the VIEs.
Explain what the amount Income (loss) from subsidiaries and VIEs
included in the
"Primary Beneficiary" column represents and revise as necessary to
clarify.
Revise your reference to primary beneficiary here and elsewhere
throughout the filing
to clarify that you are "primary beneficiary" of the VIEs for
accounting purposes
only.
Revise the balance sheet line item reference to "Investment in
subsidiaries and VIEs,"
as this implies the VIE arrangements are similar to an equity
method investment.
Provide us with a roll-forward of the "Amount due to Group
companies" for the VIEs
as of December 31, 2021.
Revise the schedule headings to refer to these schedules as
condensed consolidating
statements.
Risk Factors, page 13
10. Please include a risk factor that: (1) explains in detail why the
company believes it is not
an investment company for purposes of Section 3(a) the Company Act,
with reference to
key material facts and characteristics of the business and the
specific provisions of the
Company Act relevant to your conclusion; and (2) describes the
consequences to the
Gaofei Wang
Weibo Corporation
June 27, 2022
Page 4
company and its investors were the Commission or its Staff to
determine that the company
is an investment company.
Summary of Risk Factors, page 13
11. We note your discussion in the first bullet point under "Risks
Relating to Doing Business
in China" where you state that implementation of industry-wide
regulations in this nature
may cause the value of such securities to significantly decline.
Please also disclose that
such securities could become worthless.
12. You disclose that your ADSs may be delisted and your ADSs and shares
prohibited from
trading in the over-the-counter market under the HFCAA. Please
disclose the impact of
the Accelerating HFCAA, if enacted, including the timeframes for
implementation. In
addition, for each summary risk factor related to doing business in
China, provide a
specific cross-reference to the more detailed risk factor discussion.
Risks Relating to Our Business
We rely on assumptions and estimates to calculate certain key operating metrics
.. . ., page 25
13. You disclose that your active user number may include a number of
false or spam
accounts and therefore may not accurately represent the actual number
of active accounts.
Please tell us and disclose your estimate of the impact that false or
spam accounts and
users with multiple accounts has on the monthly active user (MAU) and
average daily
active user (DAU) measures disclosed. In addition, explain the extent
to which accounts
that have been suspended or terminated during a period impact MAU and
DAU.
Risks Related to Doing Business in China
Substantial uncertainties exist with respect to the interpretation and
implementation of
cybersecurity related regulation. . ., page 42
14. Please revise here to more clearly disclose to what extent you believe
you are compliant
with the regulations or policies that have been issued by the CAC to
date.
Item 5. Operating and Financial Review and Prospects, page 111
15. Please revise here to clarify which subsidiaries or entities are
conducting the business
operations, quantifying the amount or percentage of revenues
recognized from the VIEs to
provide further context to your discussion of operating and financial
review disclosures.
16. You state that your business has been and will continue to be
significantly affected by
your success in growing and retaining massive active users and
increasing the overall
level of engagement on your platform. In an effort to add context to
your measures of
FirstName LastNameGaofei Wang
DAU and MAU, please revise to provide such measures for the comparable
prior period
Comapany NameWeibo
or disclose the netCorporation
addition over the prior period along with a
discussion of any material
changes
June 27, in your
2022 Page 4 user growth rate.
FirstName LastName
Gaofei Wang
FirstName LastNameGaofei Wang
Weibo Corporation
Comapany
June NameWeibo Corporation
27, 2022
June 27,
Page 5 2022 Page 5
FirstName LastName
Results of Operations, page 117
17. We note that you provide a breakdown of revenue for fiscal 2019 and
2020 by key
account and SME customer. Please tell us and revise to disclose a
similar breakdown for
fiscal 2021. We also note the continued decline in the total number of
advertisers with a
significant increase in the average spending per advertiser, which you
attribute to the
churn of individual customers with relatively lower advertising
budgets. As it appears
that your revenue growth may be materially impacted by your key
account customers,
please revise to clarify how such customers impacted your advertising
measures. We
refer you to your response letter dated November 20, 2019.
Consolidated Financial Statements
Note 1. Operations, page F-9
18. Please quantify and describe for us the nature of the assets and
operations of WB Online
Investment Limited, which you include here as a major subsidiary of
the holding
company.
Note 6. Goodwill, Intangible Assets and Acquisitions, page F-32
19. You state on page 27 that a substantial portion of your goodwill and
intangible assets
arose, in part, from the acquisition of the live streaming business of
Yizhibo in 2018.
Please explain to us your allocation of such goodwill to the
advertising and marketing
segment, particularly considering Yizhibo s revenues are generated
from live streaming,
which appears to be part of the value-added services revenue. Tell us
your determination
of reporting units for goodwill for the periods presented. Also,
please tell us how the
significant decline in the live streaming revenues in fiscal 2021
factored into your
qualitative goodwill analysis. Refer to ASC 350-20-35-33 through 35-35
and ASC 350-
20-35-3A through 35-3G.
General
20. Please provide us with a legal analysis of whether you currently meet
the definition of
investment company under Section 3(a)(1)(C) of the Investment
Company Act (the
Company Act ). Please include in your analysis the relevant
calculation(s) under Section
3(a)(1)(C) (including, where required by the statute, on an
unconsolidated basis),
identifying each constituent part of the numerator(s) and
denominator(s). Your analysis
should identify and explain which assets held by the company are
investment securities
for purposes of Section 3(a)(2) of the Company Act, and should provide
legal support for
any substantive determinations and/or characterizations of assets that
are material to your
calculations.
In closing, we remind you that the company and its management are
responsible for the
accuracy and adequacy of their disclosures, notwithstanding any review,
comments, action or
absence of action by the staff.
Gaofei Wang
Weibo Corporation
June 27, 2022
Page 6
You may contact Joyce Sweeney, Senior Staff Accountant, at 202-551-3449
or Kathleen
Collins, Accounting Branch Chief, at 202-551-3499 with any questions.
FirstName LastNameGaofei Wang Sincerely,
Comapany NameWeibo Corporation
Division of Corporation
Finance
June 27, 2022 Page 6 Office of Technology
FirstName LastName