Filed Pursuant to Rule 424(b)(5)
Registration No. 333-261379
CALCULATION OF REGISTRATION FEE
Title of each class of securities to be registered
Amount to be
registered(1)
Proposed
maximum
offering price
per share(2)
Proposed
maximum
aggregate offering
price(2)
Amount of
registration fee(3)
Class A ordinary shares, par
value US$0.00025 per share(4)
12,650,000 US$ 35.01 US$ 442,876,500 US$ 41,054.65
(1)
Includes Class A ordinary shares that are issuable upon the exercise of the underwriters’ option to purchase additional Class A ordinary shares. Goldman Sachs International, an affiliate of Goldman Sachs (Asia) L.L.C., has entered into a borrowing arrangement with WB HZGS Estate (Hong Kong) Limited to facilitate the settlement of over-allocations, pursuant to which Goldman Sachs International may borrow up to 1,650,000 Class A ordinary shares from WB HZGS Estate (Hong Kong) Limited.
(2)
Calculated based on an exchange rate of HK$7.7915 to US$1.00 as of November 19, 2021, as set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System. The offering price is HK$272.80 per Class A ordinary share.
(3)
Calculated in accordance with Rules 456(b) and 457(r) of the Securities Act of 1933, as amended.
(4)
Includes all Class A ordinary shares in the Global Offering (as defined in this prospectus supplement). Such Class A ordinary shares include those initially offered and sold within the United States, and those initially offered and sold outside the United States that may be resold from time to time within the United States. Offers and sales of Class A ordinary shares outside the United States are being made pursuant to applicable law. From time to time, such Class A ordinary shares may be represented by American Depositary Shares, or ADSs, issuable upon deposit of the Class A ordinary shares registered hereby, which have been registered under a registration statement on Form F-6 (File No. 333-195072). Each such ADS represents one Class A ordinary share.

Prospectus Supplement
(To Prospectus dated November 26, 2021)
[MISSING IMAGE: LG_WEBIO-4CLR.JPG]
Weibo Corporation
11,000,000 Class A Ordinary Shares
This prospectus supplement relates to an offering of an aggregate of 11,000,000 Class A ordinary shares, par value US$0.00025 per share, of Weibo Corporation. We are offering 5,500,000 Class A ordinary shares, par value US$0.00025 per share, and the selling shareholder identified in this prospectus supplement is offering 5,500,000 Class A ordinary shares (to be converted from the Class B ordinary shares prior to the listing of our Class A ordinary shares on The Stock Exchange of Hong Kong Limited, or the Hong Kong Stock Exchange) as part of a global offering, or the Global Offering, consisting of an international offering of 9,900,000 Class A ordinary shares offered hereby, and a Hong Kong public offering of 1,100,000 Class A ordinary shares. The public offering price for the international offering and the Hong Kong public offering is HK$272.80 per Class A ordinary share, or approximately US$35.01 per Class A ordinary share based on an exchange rate of HK$7.7915 to US$1.00. We will not receive any proceeds from the sale of the Class A ordinary shares to be offered by the selling shareholder identified in this prospectus supplement.
Our American depositary shares, or ADSs, are listed on the Nasdaq Global Select Market under the symbol “WB.” On December 1, 2021, the last reported trading price of our ADSs on the Nasdaq Global Select Market was US$36.00 per ADS, or HK$280.49 per Class A ordinary share, based upon an exchange rate of HK$7.7915 to US$1.00. Each ADS represents one Class A ordinary share.
The international offering contemplated herein consists of a U.S. offering and a non-U.S. offering made outside the United States in compliance with applicable law. We are paying a registration fee for Class A ordinary shares sold in the United States, as well as for Class A ordinary shares initially offered and sold outside the United States in the Global Offering that may be resold from time to time into the United States.
Approval-in-principal has been granted by the Hong Kong Stock Exchange pursuant to Chapter 19C of the Hong Kong Stock Exchange Listing Rules, for the listing of, and permission to deal in, our Class A ordinary shares under the stock code “9898.”
See “Risk Factors” beginning on page S-24 of this prospectus supplement and in any documents incorporated by reference into this prospectus supplement for a discussion of certain risks that should be considered in connection with an investment in our Class A ordinary shares.
Weibo Corporation is not an operating company but a Cayman Islands holding company with operations primarily conducted by our subsidiaries in China and through contractual arrangements with our variable interest entities based in China. PRC laws and regulations restrict and impose conditions on foreign direct investment in companies involved in the provision of internet information services and other related services. Therefore, we operate such business in China through our variable interest entities, which we refer to as our VIEs in this prospectus supplement, and rely on contractual arrangements among our PRC subsidiaries, our VIEs and their nominee shareholders to control the business operations of our VIEs. Investors in our ADSs thus are not purchasing equity interest in our operating entities in China but instead are purchasing equity interest in a Cayman Islands holding company. As used in this prospectus supplement, “Weibo,” “we,” “us,” “our company” or “our” refers to Weibo Corporation, its subsidiaries, and, in the context of describing our operations and consolidated financial information, our VIEs and their subsidiaries in China.
We face various legal and operational risks and uncertainties associated with being based in or having our operations primarily in China and the complex and evolving PRC laws and regulations. For example, we face risks associated with regulatory approvals on offerings conducted overseas by and foreign investment in China-based issuers, the use of our VIEs, anti-monopoly regulatory actions, and oversight on cybersecurity and data privacy, as well as the lack of PCAOB inspection on our auditors, which may impact our ability to conduct certain businesses, accept foreign investments, or list on foreign exchange outside of China. These risks could result in a material adverse change in our operations and the value of our ADSs, significantly limit or completely hinder our ability to offer or continue to offer securities to investors, or cause the value of such securities to significantly decline.
Our corporate structure is subject to risks associated with our contractual arrangements with our VIEs. Investors may never directly hold equity interests in our VIEs. If the PRC government finds that the agreements that establish the structure for operating our business do not comply with PRC laws and regulations, or if these regulations or their interpretations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations. Our holding company, our PRC subsidiaries, our VIEs, and investors of our company face uncertainty about potential future actions by the PRC government that could affect the enforceability of the contractual arrangements with our VIEs and, consequently, significantly affect the financial performance of our VIEs and our company as a whole.
Neither the United States Securities and Exchange Commission (the “SEC”) nor any state securities commission has approved or disapproved of these securities or determined that this prospectus supplement or the accompanying prospectus is accurate or complete. Any representation to the contrary is a criminal offense.
PRICE HK$272.80 PER CLASS A ORDINARY SHARE
Per Class A
Ordinary Share
Total
Public offering price
HK$ 272.80(1)
HK$3,000,800,000.00
Underwriting discounts and commissions(2)
HK$ 5.4560
HK$   60,016,000.00
Proceeds to us (before expenses)(3)
HK$ 267.3440
HK$1,470,392,000.00
Proceeds to the Selling Shareholder (before expenses)
HK$ 267.3440
HK$1,470,392,000.00
(1)
Equivalent to US$35.01 per ADS, based upon each ADS representing one Class A ordinary share and an exchange rate of HK$7.7915 to US$1.00 as of November 19, 2021, as set forth in the H.10 statistical release of The Board of Governors of the Federal Reserve System.
(2)
See “Underwriting” beginning on page S-63 of this prospectus supplement for additional information regarding total underwriting compensation.
(3)
Includes net proceeds of HK$294,078,400.00 from the sale of 1,100,000 Class A ordinary shares in the Hong Kong public offering.
The selling shareholder identified in this prospectus supplement has granted the international underwriters the option, exercisable by Goldman Sachs (Asia) L.L.C., Credit Suisse (Hong Kong) Limited, CLSA Limited and China International Capital Corporation Hong Kong Securities Limited, or the Joint Representatives, on behalf of the international underwriters, to purchase up to an additional 1,650,000 Class A ordinary shares at the public offering price until 30 days after the last day for the lodging of applications under the Hong Kong public offering. Goldman Sachs International, an affiliate of Goldman Sachs (Asia) L.L.C., has entered into a borrowing arrangement with WB HZGS Estate (Hong Kong) Limited to facilitate the settlement of over-allocations. Goldman Sachs International, an affiliate of Goldman Sachs (Asia) L.L.C., is obligated to return Class A ordinary shares to WB HZGS Estate (Hong Kong) Limited by causing Goldman Sachs (Asia) L.L.C. to exercise the option to purchase additional Class A ordinary shares from the Selling Shareholder or by making purchases in the open market. No fees or other remuneration will be paid by the underwriters to us or WB HZGS Estate (Hong Kong) Limited for the loan of these Class A ordinary shares.
The underwriters expect to deliver the Class A ordinary shares against payment therefor through the facilities of the Central Clearing and Settlement System on or around December 8, 2021.
Joint Sponsors, Joint Global Coordinators, Joint Bookrunners and Joint Lead Managers
Goldman Sachs Credit Suisse CLSA CICC
Joint Global Coordinators, Joint Bookrunners and Joint Lead Managers
Nomura
Deutsche Bank
Joint Bookrunners and Joint Lead Managers
Haitong International
Huatai
Valuable Capital
ABCI
CMBC
CMBI
Prospectus supplement dated December 2, 2021.

 
Table of Contents
Prospectus Supplement
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Prospectus
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You should rely only on the information contained or incorporated by reference in this prospectus supplement, the accompanying prospectus, or any other offering materials we file with the SEC. We have not, WB HZGS Estate (Hong Kong) Limited has not, the selling shareholder has not, and the underwriters have not, authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. None of the underwriters, WB HZGS Estate (Hong Kong)
 
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Limited, the selling shareholder, or us is making an offer to sell the securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus supplement, the accompanying prospectus and the documents incorporated by reference is accurate only as of each of their respective dates. Our business, financial condition, results of operations and prospects may have changed since those dates. Neither this prospectus supplement nor the accompanying prospectus constitutes an offer, or an invitation on our behalf or the underwriter to subscribe for and purchase, any of the Class A ordinary shares and may not be used for or in connection with an offer or solicitation by anyone, in any jurisdiction in which such an offer or solicitation is not authorized or to any person to whom it is unlawful to make such an offer or solicitation.
 
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ABOUT THIS PROSPECTUS SUPPLEMENT
This document consists of two parts. The first part is this prospectus supplement, which describes the specific terms of the Global Offering and other matters relating to us and our financial condition. The second part, the base prospectus, presents more general information about this offering. The base prospectus was included in the registration statement on Form F-3 (File No. 333-261379) that we filed with the SEC on November 26, 2021 and has been updated since that time with additional information that is incorporated by reference. Generally, when we refer only to the “prospectus,” we are referring to both parts combined, and when we refer to the “accompanying prospectus,” we are referring to the base prospectus as updated through incorporation by reference.
If information in this prospectus supplement differs from information in the accompanying prospectus, you should rely on the information in this prospectus supplement.
Other than the Hong Kong public offering, no action is being taken in any jurisdiction outside the United States to permit a public offering of the Class A ordinary shares, and no action is being taken in any jurisdiction outside the United States to permit the possession or distribution of this prospectus supplement or the accompanying prospectus in that jurisdiction. Persons who come into possession of this prospectus supplement or the accompanying prospectus in jurisdictions outside the United States are required to inform themselves about and to observe any restrictions as to the Global Offering and the distribution of this prospectus supplement and the accompanying prospectus applicable to that jurisdiction.
You should not consider any information in this prospectus supplement or the accompanying prospectus to be investment, legal or tax advice. You should consult your own counsel, accountants and other advisors for legal, tax, business, financial and related advice regarding the purchase of any of the securities offered by this prospectus supplement.
In this prospectus supplement, unless otherwise indicated or unless the context otherwise requires,

“we,” “us,” “our company,” “the Company” or “our” refers to Weibo Corporation, a Cayman Islands company, its subsidiaries, and, in the context of describing its operations and consolidated financial information, include its consolidated variable interest entities (“VIEs”) in China;

“Weibo” refers to our social media platform and the products and services that we provide to users, customers and platform partners through that platform;

“SINA” refers to Sina Corporation, our parent company and controlling shareholder;

“China” or “PRC” refers to the People’s Republic of China, excluding, for the purpose of this prospectus only, Hong Kong Special Administrative Region, Macau Special Administrative Region, and Taiwan;

“daily video viewers” refers to users who viewed videos on Weibo on a daily basis;

“DAUs” refers to daily active users, which are Weibo users who logged on with a unique Weibo ID and accessed Weibo through our website, mobile website, desktop or mobile applications, SMS or connections via our platform partners’ websites or applications that are integrated with Weibo, on a given day, and “average DAUs” for a month refers to the average of the DAUs for each day during the month. The numbers of our DAUs are calculated using internal company data that has not been independently verified and we treat each account as a separate user for purposes of calculating DAUs, although it is possible that certain individuals or organizations may have set up on more than one account and certain accounts are used by multiple individuals within an organization;

“feeds” include both posts and reposts;

“MAUs” refers to monthly active users, which are Weibo users who logged on with a unique Weibo ID and accessed Weibo through our website, mobile website, desktop or mobile applications, SMS or connections via our platform partners’ websites or applications that are integrated with Weibo, during a given calendar month. The numbers of our MAUs are calculated using internal company data that has not been independently verified, and we treat each account as a separate user for purposes
 
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of calculating MAUs, although it is possible that certain individuals or organizations may have set up on more than one account and certain accounts are used by multiple individuals within an organization;

“monthly active content creators” refers to users who have posted at least one original post on Weibo in a given month;

“top content creators” refers to content creators with more than 10,000 followers as of the end of a given month, or 10,000 monthly views on Weibo in a given month, excluding duplicates;

“shares” or “ordinary shares” refers to our Class A and Class B ordinary shares, par value $0.00025 per share;

“ADSs” refers to our American depositary shares. Each ADS represents one Class A ordinary share;

“GAAP” refers to generally accepted accounting principles in the United States;

all references to “RMB” or “renminbi” are to the legal currency of China, and all references to “$,” “dollars,” “US$” and “U.S. dollars” are to the legal currency of the United States. Unless otherwise noted, all translations from RMB to U.S. dollars and from U.S. dollars to RMB in this document were made at a rate of RMB6.3863 to US$1.00, the exchange rate on November 19, 2021, as set forth in the H.10 statistical release published by the Federal Reserve Board; and

all discrepancies in any table between the amounts identified as total amounts and the sum of the amounts listed therein are due to rounding.
Unless specifically indicated otherwise or unless the context otherwise requires, all references to our ordinary shares exclude Class A ordinary shares issuable upon (i) the exercise of options outstanding under our share incentive plans and (ii) conversion of our convertible senior notes.
 
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WHERE YOU CAN FIND MORE INFORMATION
We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and, in accordance with the Exchange Act, we file annual reports and other information with the SEC. Information we file with the SEC can be obtained over the internet at the SEC’s website at www.sec.gov.
This prospectus supplement is part of a registration statement that we filed with the SEC, using a “shelf” registration process under the Securities Act of 1933, as amended, or the Securities Act, relating to the securities to be offered. This prospectus supplement does not contain all of the information set forth in the registration statement, certain parts of which are omitted in accordance with the rules and regulations of the SEC. For further information with respect to Weibo Corporation and the securities, reference is hereby made to the registration statement and the prospectus contained therein. The registration statement, including the exhibits thereto, may be inspected on the SEC’s website.
 
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to “incorporate by reference” the information we file with or submit to the SEC, which means that we can disclose important information to you by referring you to those documents that are considered part of this prospectus supplement and the accompanying prospectus. Each document incorporated by reference is current only as of the date of such document, and the incorporation by reference of such documents should not create any implication that there has been no change in our affairs since such date. Information that we file with or submit to the SEC in the future and incorporate by reference will automatically update and supersede the previously filed information. See “Incorporation of Certain Documents by Reference” in the accompanying prospectus for more information. All of the documents incorporated by reference are available at www.sec.gov under Weibo Corporation, CIK number 0001595761.
We incorporate by reference the documents listed below in this prospectus supplement.



With respect to the offering of the securities under this prospectus supplement, all subsequent reports on Form 20-F, and any report on Form 6-K that indicates it (or any applicable portions thereof) is being incorporated by reference that we file with or furnish to the SEC on or after the date hereof and until the termination or completion of the offering by means of this prospectus supplement.
As you read the documents incorporated by reference, you may find inconsistencies in information from one document to another. If you find inconsistencies, you should rely on the statements made in the most recent document.
We will provide a copy of any or all of the information that has been incorporated by reference into the accompanying prospectus, other than exhibits to those documents unless such exhibits are specially incorporated by reference in this prospectus supplement, upon written or oral request, to any person, including any beneficial owner of the securities, to whom a copy of this prospectus supplement is delivered, at no cost to such person. You may make such a request by writing or telephoning us at the following mailing address or telephone number:
Weibo Corporation
8/F, QIHAO Plaza, No. 8 Xinyuan S. Road
Chaoyang District, Beijing 100027
People’s Republic of China
+86 (10) 5898-3095
Attention: Investor Relations
 
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SPECIAL NOTES REGARDING FORWARD-LOOKING STATEMENTS
This prospectus supplement, the accompanying prospectus, and the documents incorporated by reference may contain forward-looking statements that involve risks and uncertainties and reflect our current expectations and views of future events. All statements other than statements of historical facts are forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by terminology such as “may,” “will,” “expect,” “anticipate,” “aim,” “intend,” “plan,” “believe,” “estimate,” “is/are likely to,” “future,” “potential,” “continue,” or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, and financial needs. These forward-looking statements include statements relating to, among other things:

our goals and strategies;

our future business development, financial conditions and results of operations;

our proposed use of proceeds from the sale of equity securities;

our ability to attract and retain users and customers and generate revenue and profit from our customers;

our ability to retain key personnel and attract new talent;

competition in social media, social networking, online marketing, and other businesses in which we engage;

the outcome of our annual PFIC (as defined below) evaluations;

the outcome of ongoing or any future litigation or arbitration, including those relating to intellectual property rights;

the growth of social media, internet and mobile users and internet and mobile advertising in China; and

PRC governmental policies relating to media, the internet, internet content providers and online advertising, and the implementation of a corporate structure involving VIEs in China.
The forward-looking statements included in this prospectus supplement, in the accompanying prospectus, and in the documents incorporated by reference therein are subject to risks, uncertainties, and assumptions about our company. Although we believe that our expectations expressed in these forward-looking statements are reasonable, our expectations may later be found to be incorrect. Our actual results of operations may differ materially from the forward-looking statements as a result of the risk factors disclosed in this prospectus supplement, in the accompanying prospectus, and in the documents incorporated by reference therein. You should read thoroughly this prospectus and the documents that we refer to with the understanding that our actual future results may be materially different from and worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements.
This prospectus supplement contains certain data and information that we obtained from various government and private publications. Statistical data in these publications also include projections based on a number of assumptions. Furthermore, if any one or more of the assumptions underlying the market data are later found to be incorrect, actual results may differ from the projections based on these assumptions.
We would like to caution you not to place undue reliance on these forward-looking statements. You should read these statements in conjunction with the risk factors disclosed herein, in the accompanying prospectus, and in the documents incorporated by reference therein for a more complete discussion of the risks of an investment in our securities. We operate in a rapidly evolving environment. New risks emerge from time to time and it is impossible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ from those contained in any forward-looking statement. We do not undertake any obligation to update or revise the forward-looking statements except as required under applicable law.
 
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PROSPECTUS SUPPLEMENT SUMMARY
The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial statements and notes thereto appearing elsewhere in this prospectus supplement, the accompanying prospectus, and the documents incorporated by reference herein and therein. In addition to this summary, we urge you to read the entire prospectus supplement, the accompanying prospectus, and the documents incorporated by reference carefully, especially the risks of investing in our ADSs discussed under “Risk Factors” of this prospectus supplement and under “Item 3.D. Key Information — Risk Factors” in our 2020 Form 20-F, which contains our audited consolidated financial statements as of December 31, 2019 and 2020 and for the years ended December 31, 2018, 2019, and 2020, and our current report on Form 6-K furnished to the SEC on November 18, 2021, as amended, are incorporated by reference in this prospectus supplement and the accompanying prospectus. This prospectus supplement contains information from an industry report commissioned by us and prepared by China Insights Consultancy, or CIC, an independent research firm, to provide information regarding our industry. We refer to this report as the CIC Report.
Overview
Who We Are
Weibo is a leading social media platform in China for people to create, discover and distribute content. By providing a simple and inspirational way for people and organizations in China and the global Chinese communities to publicly express themselves in real time, interact with others on a platform with vast scale and stay connected with the world, Weibo has had a profound social impact in China. Launched in 2009, Weibo has been committed to enabling faster, easier, and richer connection among people and has become an integral part of many of Weibo users’ daily lives.
Leveraging the early-mover advantage and the accumulated know-hows and insights in the social media industry, Weibo has amassed a large user base in China and in Chinese communities in more than 190 countries around the world. In June 2021, Weibo had 566 million MAUs and 246 million average DAUs. Weibo is one of the top 10 mobile apps and one of the top 3 social media platforms in China in terms of MAUs and DAUs in June 2021, according to the CIC Report.
Weibo has transformed the way people express themselves and interact with others in the public internet space. Any user can create and post a feed and attach multimedia or long-form content. User relationships on Weibo may be asymmetric, and any user can follow any other user and add comments to a feed while reposting. As of June 30, 2021, Weibo had 318 billion “follow” relationships existing on its platform. This simple, asymmetric, and distributed nature of Weibo allows an original feed to become a live viral conversation stream.
Weibo serves a wide range of users including ordinary people, celebrities, key opinion leaders (“KOLs”), and other public figures or influencers, as well as media outlets, businesses, government agencies, charities, and other organizations, making it a microcosm of Chinese society. As of June 30, 2021, there were 4.4 million verified accounts, such as celebrities, KOLs, enterprise partners, and media outlets on Weibo. As a leading social media, Weibo allows people in China and the global Chinese communities to be heard publicly and exposed to the rich ideas, cultures, and experiences in a broader world. In June 2021, Weibo had 41.9 million monthly active content creators, generating original posts for public self-expression. In June 2021, top content creators on Weibo platform reached 2.3 million, representing a CAGR of 24% from June 2019. Top content creators in June 2021 refers to content creators with more than 10,000 followers as of June 30, 2021, or over 10,000 monthly views in June 2021, excluding duplicates.
Weibo offers comprehensive content formats as a social media platform. Weibo users can create, discover, consume and share various formats of content, including text, photo, video, live streaming, audio and topic, etc. on Weibo platform. By aggregating various media formats, Weibo platform allows content creators to have more diverse choices to create content in their most desirable ways, so that more enriched content could be generated and distributed across the platform. Weibo is also well positioned to capture the market trends in media formats transformation. To capitalize on the mega trend of video, Weibo has launched a series of innovative initiatives to improve its video product offerings and to empower and attract
 
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more video content creators to its platform. As a result, the average number of daily video viewers grew at a CAGR of 20% from June 2019 to June 2021.
To support the diverse content offerings, Weibo also has comprehensive coverage of content categories and content creators. In June 2021, Weibo had 46 content verticals, such as celebrities and entertainment, humor, media, variety shows and TV programs, fashion, cosmetics, finance and games. Among these content verticals, 28 of them each has over 10 billion monthly views in June 2021. The diversified content offerings on Weibo platform cater to the evolving and broad interests of Weibo users and cultivate a more vibrant ecosystem on Weibo platform.
Our Revenue Model
We began monetization on our platform in 2012, and have since experienced solid revenue growth and margin expansion. Our revenues increased from US$1,718.5 million in 2018 to US$1,766.9 million in 2019 but slightly decreased to US$1,689.9 million in 2020 mainly due to the negative impact and uncertainties brought forth by the COVID-19 pandemic. Our revenue’s year-on-year growth rate recovered to 10% in the fourth quarter of 2020 and further increased to 42% in the first quarter and 48% in the second quarter of 2021, as the COVID-19 pandemic was gradually contained in China and the advertising demand recovered accordingly.
We generate revenues primarily from customers who purchase advertising and marketing services, and, to a lesser extent, from fee-based revenues, such as VIP membership. Revenues generated from advertising and marketing services accounted for 88% of our total revenues in 2020 and 86% of our total revenues in the six months ended June 30, 2021. We had income from operations of US$609.3 million in 2018, US$597.6 million in 2019 and US$506.8 million in 2020. Our income from operations increased from US$164.2 million in the six months ended June 30, 2020 to US$301.8 million for the same period in 2021. Our operating margin, being the ratio of income from operations to total revenues, reached 30.0% in 2020 and 29.2% in the first six months ended June 30, 2021.
Our Mission
Our mission is to empower people to discover the broader world and be heard publicly.
Our Value Propositions
Our platform has unique value propositions for our users, content creators and advertising and marketing customers. Our collective relationship with them is crucial to the continued strength and value of our overall platform.
To users

Express and share

We provide an unprecedented experience for people in China and the global Chinese communities to be able to publicly express themselves and share their life moments, opinions and content in real time on a platform with a vast scale.

Discover rich content and diversified opinions

Weibo is where people come to discover and learn more about what is going on with the people, organizations and topics that interest them, as well as their diversified opinions.

Stay current and connected

Users come to Weibo to stay current on the latest trends and events and connect with other users who share similar interests.

Make a social impact

Weibo helps people come together to realize common goals, and to accomplish things that they could not accomplish on their own.
 
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To content creators

Build up fan base and social assets

We help the content creators on our platform to engage and interact with their followers and build up their social assets to create social value and monetization opportunities. The top content creators, such as celebrities and KOLs, regularly interact with their followers, and among each other for topics of the same interest on Weibo. This type of interaction is unique to our platform.

Monetization

We are committed to creating and enhancing monetization opportunities for content creators through diversified channels such as advertisement, e-commerce and live streaming.
To advertising and marketing customers

Broad and targeted reach

We are an early mover of social advertising in China. We provide our customers with social marketing solutions based on our social interest graph recommendation engine that help them reach and engage their target audience.

Full spectrum of tailored solutions

We provide a full spectrum of innovative and tailored advertising and marketing solutions ranging from brand awareness to interest generation, sales conversion and loyalty marketing to cater to the diverse marketing demands of our customers.

Viral effect

Weibo feeds and trends, whether promoted or organic, have the potential to go viral due to the public and distributed nature of our platform. This provides our customers with additional upside value to increase the social elements of their advertising.
COMPETITIVE LANDSCAPE
In China, there are several types of social platforms dedicated to serving users’ needs to virtually connect with each other. Compared with social network platforms, where social relationship is primarily symmetric and reciprocal, social media platforms facilitate the build-out of asymmetric social relationship and address users’ differentiated social needs in the public arena. Furthermore, among the leading social media platforms in China, some focus on specific content formats such as video and live streaming, while others provide comprehensive content formats to cater to the diverse user needs. Platforms with more diverse content formats and more vibrant content creation ecosystems are better equipped to address the evolving user needs with diverse backgrounds and interests.
Weibo is one of the top 5 social platforms and the top 3 social media platforms in China in terms of MAUs and DAUs in June 2021, according to the CIC report.
Weibo operates in a highly competitive industry which is rapidly changing due to the quickly evolving market demand and user preferences. Driven by the increasing popularity of social platforms, the penetration rate for the social platforms, measured by the ratio of overall social platform users to all mobile users, has already come to hover near the 100% mark in 2020. New user acquisition has been one of the key challenges that each of the social platforms faces. The industry is evolving rapidly while witnessing rising competition for traffic and user time. Industry players compete for audiences and content with other major Chinese internet companies that provide online media as well as offline media companies. The user growth rate of established social media platforms may slow over time as the size of the user base increases and as they achieve higher market penetration in China’s internet population.
OUR INNOVATION
We believe that our success is attributable to our unique social product positioning, a self-reinforcing ecosystem with large user base and diversified content offerings, as well as strong monetization capability and leading technology platform.
 
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Launched in 2009, Weibo is one of the earliest social media platforms (providing microblogging service) in China, according to the CIC Report. Weibo leverages its early-mover advantage and has built high entry barrier in the social media industry in China. Currently, Weibo is the only active social media platform today arising from a microblogging platform in China, according to the CIC Report. Weibo has experienced rapid expansion as an early-mover since its inception, and developed into a leading social media platform in China for people to create, share and discover contents online.
As a leading social media platform in China, Weibo combines the means of public self-expression in real time with powerful platform for social interaction, content aggregation and distribution. Weibo provides a compelling and efficient way for people to discover what’s happening in the world and engage in public social conversations. Weibo serves as a microcosm of Chinese society, and for many people in China, Weibo allows them to be heard publicly and exposed to the rich ideas, cultures and experiences of the broader world. Weibo’s success is also attributable to the high quality content in rich media format on its platform.
Weibo’s product development approach is centered on building simple and useful tools to enable its users to access Weibo to discover, create, and distribute content and interact with others on its platform in real time. Weibo has launched many innovative product features since its inception, some of which are later widely adopted in China’s internet space, such as @Mention, Trends, Hot Search and Super Topic.
Weibo seeks to provide innovative advertising and marketing solutions to enable its customers to promote their brands and conduct effective marketing activities. Weibo’s advertising and marketing customers seek a full spectrum of online advertising and marketing services ranging from brand awareness to interest generation, sales conversion and loyalty marketing. Weibo has introduced many innovative advertising products, such as Super FST, Promoted Trends and Search.
Weibo is passionate about developing new and innovative products and services that will create a better user experience. Built on machine learning and cloud computing, Weibo has developed a leading social media platform to satisfy users’ customized content consumption needs, according to the CIC Report. Weibo invests heavily in research and development. Weibo recorded product development expenses of US$249.9 million, US$284.4 million, US$324.1 million and US$198.0 million in 2018, 2019, 2020 and for the six months ended June 30, 2021, respectively. The product development team of Weibo consisted of 2,374 members as of December 31, 2018, 2,364 members as of December 31, 2019, 2,709 members as of December 31, 2020, and 2,770 members as of June 30, 2021. They are responsible for developing, operating and maintaining our products.
KEY OPERATING METRICS
December
2018
December
2019
December
2020
June
2021
MAUs (in millions)
462
516
521
566
Average DAUs (in millions)
200
222
225
246
Ratio of average DAUs to MAUs
43%
43%
43%
43%
We have a large and active user base. Our MAUs increased from 462 million in December 2018, to 516 million in December 2019, to 521 million in December 2020 and further to 566 million in June 2021. Our average DAUs increased from 200 million in December 2018, to 222 million in December 2019, to 225 million in December 2020 and further to 246 million in June 2021. The ratio of average DAUs to MAUs remained stable at 43% during 2018, 2019, 2020 and the six months ended June 30, 2021.
Our user growth rate may fluctuate from time to time depending on various factors, including our business operation and user base growth, as well as the general market condition.
For the Year Ended December 31,
For the Six Months Ended June 30,
2018
2019
2020
2020
2021
Average spending per advertiser (excluding Alibaba) (in US$)
470 593 825 454 1,379
Number of advertising customers (in millions)
2.9 2.4 1.6 1.2 0.6
 
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The total number of advertisers was 2.4 million in 2019, compared to 2.9 million in 2018, mainly due to customer churn of SME customers, as a result of mixed challenges from unfavorable macroeconomic conditions and intense market competitions. The average spending per advertiser (excluding Alibaba) increased by 26% from US$470 in 2018 to US$593 in 2019, primarily attributable to the increase in spending by our recurring customers, and also a reflection of the churn of SME customers with relatively lower advertising budget.
The total number of advertisers was 1.6 million in 2020, compared to 2.4 million in 2019, while the average spending per advertiser (excluding Alibaba) increased by 39% from US$593 in 2019 to US$825 in 2020, both of which were primarily due to the churn of individual customers with relatively lower advertising budget.
The total number of advertisers was 0.6 million in the first six months ended June 30, 2021, compared to 1.2 million in the same period in 2020, while the average spending per advertiser (excluding Alibaba) increased significantly from US$454 in the first six months ended June 30, 2020 to US$1,379 in the same period in 2021, both of which were primarily due to the churn of individual customers with relatively lower advertising budget.
As of December 31,
As of June 30,
2018
2019
2020
2021
Number of verified accounts (in millions)
3.7 4.0 4.3 4.4
The number of our verified accounts generally increased during 2018, 2019, 2020 and the six months ended June 30, 2021, as we kept growing our network of celebrities, KOLs, enterprises partners and media outlets.
Our Strengths
We believe that the following strengths contribute to our success and differentiate us from our peers:

Pioneer and leader in social media industry in China;

Robust ecosystem with powerful network effects;

Large, diverse and engaged user base;

Ever-growing supply of rich and comprehensive content offerings;

Proven and continuous growth in monetization;

Cutting-edge technological capabilities and scalable infrastructure; and

Visionary and experienced management team with a proven track record.
Our Strategies
We intend to achieve our mission and further solidify our unique position by pursuing the following strategies:

Grow our user base and increase user engagement;

Further expand and improve our content ecosystem;

Enhance monetization capabilities; and

Selectively pursue strategic alliances, investments and acquisitions.
Summary of Risk Factors
Investing in our Class A ordinary shares involves significant risks. You should carefully consider all of the information in this prospectus supplement before making an investment in our Class A ordinary shares. Below please find a summary of the principal risks we face, organized under relevant headings. These risks are discussed more fully in the section titled “Risk factors.” In addition, you should carefully consider
 
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the matters discussed under “Risk Factors” in our 2020 Form 20-F and in Exhibit 99.1 to our current report on Form 6-K furnished to the SEC on November 18, 2021, titled “Weibo Corporation Supplemental and Updated Disclosures,” as well as other documents incorporated by reference into the accompanying prospectus.
Risks Relating to Our Business

If we fail to grow our active user base, or if user engagement on our platform declines, our business, financial condition and operating results may be materially and adversely affected.

If our users and platform partners do not continue to contribute content or their contributions are not valuable to other users, we may experience a decline in user traffic and user engagement.

We rely on our partnership program with channel partners, which mainly include application pre-install partners, programmatic buying partners and application marketplaces, to drive traffic to our platform, and if our partnership program becomes less effective or if the smartphone market and shipment in China slow down compared to the prior years, traffic to our platform could decline and our business and operating results could be adversely affected.

If we are unable to compete effectively for user traffic or user engagement, our business and operating results may be materially and adversely affected.

We may not be able to maintain or grow our revenues or our business.

Privacy concerns relating to our products and services and the use of user information could damage our reputation, deter current and potential users and customers from using Weibo and negatively impact our business.
Risks Relating to Our Corporate Structure

Uncertainties exist with respect to the interpretation and implementation of the PRC Foreign Investment Law and how it may impact the viability of our current corporate structure, corporate governance and business operations.

If the PRC government finds that the agreements establishing the structure for operating our businesses in China do not comply with PRC regulations on foreign investment in internet and other related businesses, or if these regulations or their interpretation change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.

We rely on contractual arrangements with our VIEs and their respective shareholders for our operations in China, which may not be as effective in providing operational control as direct ownership.
Risks Relating to Doing Business in China

Our ADSs may be delisted under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect auditors who are located in China. The delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment. Additionally, the inability of the PCAOB to conduct inspections deprives our investors with the benefits of such inspections.

Regulation and censorship of information disseminated over the internet in China may adversely affect our business and subject us to liability for information displayed on Weibo, or Yizhibo.

Substantial uncertainties exist with respect to the interpretation and implementation of cybersecurity related regulations and cybersecurity review as well as any impact these may have on our business operations.

Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protections available to you and us.

Adverse changes in China’s or global economic and political policies could have a material and adverse effect on overall economic growth in China, which could materially and adversely affect our business.
 
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Any failure or perceived failure by us to comply with the Anti-Monopoly Guidelines for Internet Platforms Economy Sector and other PRC anti-monopoly laws and regulations may result in governmental investigations or enforcement actions, litigation or claims against us and could have an adverse effect on our business, financial condition and results of operations.
Risks Relating to Our Shares, Our ADSs and The Listing

As a company applying for listing under Chapter 19C, we adopt different practices as to certain matters as compared with many other companies listed on the Hong Kong Stock Exchange.

The trading price for our ADSs has been and is likely to continue be, and the trading price of our Class A ordinary shares can be, volatile, regardless of our operating performance, which could result in substantial losses to holders of our listed securities.

Substantial future sales or perceived potential sales of our Class A ordinary shares, ADSs, or other equity or equity-linked securities in the public market could cause the price of our listed securities to decline.

If securities or industry analysts do not publish research or reports about our business, or if they adversely change their recommendations regarding our listed securities, the trading price for our listed securities and trading volume could decline.

The sale or availability for sale, or perceived sale or availability for sale, of substantial amounts of our listed securities could adversely affect their trading price.
Risks Relating to the Global Offering

An active trading market for our Class A ordinary shares on the Hong Kong Stock Exchange might not develop or be sustained and trading prices of our Class A ordinary shares might fluctuate significantly.

During the period between pricing and trading of our Class A ordinary shares in connection with this offering, the price of our ADSs traded on Nasdaq may fall, which could result in a fall in the price of our Class A ordinary shares to be traded on the Hong Kong Stock Exchange.

There is uncertainty as to whether Hong Kong stamp duty will apply to the trading or conversion of our ADSs following our initial public offering in Hong Kong and the listing of our Class A ordinary shares on the Hong Kong Stock Exchange.

Purchasers of our Class A ordinary shares in the Global Offering will experience immediate dilution and may experience further dilution if we issue additional Class A ordinary shares in the future.
Our Shareholding and Corporate Structure
Our Major Shareholders and Relationship with Controlling Shareholders
As of September 30, 2021, Mr. Charles Chao, our chairman of the board of directors since our inception, was interested in and controlled through Sina Corporation, a wholly owned subsidiary of Sina Group Holding Company Limited, which is a wholly owned subsidiary of New Wave MMXV Limited, a business company incorporated in the BVI and controlled by Mr. Charles Chao, 101,778,958 Class B ordinary shares of our Company. As of September 30, 2021, Mr. Chao controlled approximately 70.6% of the aggregate voting rights in our Company. Immediately following the Global Offing, Mr. Charles Chao will control approximately 67.6% of the aggregate voting rights in our Company, assuming the shareholding in the company which he controls through SINA Corporation has remained unchanged since September 30, 2021 and will remain unchanged until SINA Corporation sells shares in this Global Offering, and without taking into account any allotment and issuance of Class A ordinary shares upon the exercise of the over-allotment option. For further details, please see “Principal and Selling Shareholders.”
Dual Class Voting Structure
Under our dual class voting structure, our share capital comprises Class A ordinary shares and Class B ordinary shares. Each Class A ordinary share entitles the holder to exercise one vote and each Class B
 
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ordinary share entitles the holder to exercise three votes respectively, on all matters that require a shareholder’s vote. For additional information, see “Principal and Selling Shareholders,” as well as other documents that are incorporated by reference into this prospectus supplement.
You are advised to be aware of the potential risks of investing in companies with a dual class voting structure, in particular that the interests of the beneficiaries of such structure may not necessarily always be aligned with those of our shareholders as a whole, and that such beneficiaries will be in a position to exert significant influence over the affairs of our company and the outcome of shareholders’ resolutions, irrespective of how other shareholders vote. You should make the decision to invest in our company only after due and careful consideration. For further information about the risks associated with the dual class voting structure adopted by the Company, please refer to “Item 3.D. Key Information — Risk Factors — Risks Related to Our Corporate Structure” in our 2020 Form 20-F, as well as other documents that are incorporated by reference into this prospectus supplement.
Our VIE Structure
The diagram below illustrates the general structure of the economic flow and control under our VIE structure created by the contractual arrangements:
[MISSING IMAGE: TM2132392D4-FC_VIESTRUCTBW.JPG]
Current PRC laws and regulations impose substantial restrictions on foreign ownership of internet information services and value-added telecommunication service businesses in China. Therefore, we conduct part of our businesses through a series of agreements between Weibo Technology, our PRC subsidiary, Weimeng and Weimeng Chuangke, our consolidated affiliated entities, and/or their respective shareholders.
Additionally, we have been advised by our PRC counsel, TransAsia Lawyers, that there are substantial uncertainties regarding the interpretation and application of current and future PRC Laws. Accordingly, PRC regulatory authorities or courts may take a view that is contrary to the opinion of our PRC counsel. It is uncertain whether any new PRC laws relating to contractual arrangements will be adopted, what the laws would provide. If we or any of the VIEs is found to be in violation of existing or future PRC laws, or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authority would have broad discretion to take action in dealing with the violation or failure, in which case we could be subject to severe penalties, including being prohibited from continuing our operations or unwinding the contractual arrangements. See “Item 4. Information on the Company — A. History and Development of the Company” in our 2020 Form 20-F, as well as other documents that are incorporated by reference into this prospectus supplement.
 
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Transfer of Funds and Other Assets
Restrictions on Foreign Exchange and the Ability to Transfer Cash Between Entities, Across Borders and to U.S. Investors
Our ability to pay dividends, if any, to the shareholders and ADSs investors and to service any debt we may incur will depend upon dividends paid by our PRC subsidiaries. Under PRC laws and regulations, our PRC subsidiaries subject to certain restrictions with respect to paying dividends or otherwise transferring any of their net assets offshore to us. In particular, under the current effective PRC laws and regulations, dividends may be paid only out of distributable profits. Distributable profits are the net profit as determined under PRC GAAP, less any recovery of accumulated losses and appropriations to statutory and other reserves required to be made. Each of our PRC subsidiaries is required to set aside at least 10% of its after-tax profits each year, after making up previous years’ accumulated losses, if any, to fund certain statutory reserve funds, until the aggregate amount of such a fund reaches 50% of its registered capital.
Furthermore, if certain procedural requirements are satisfied, the payment of current account items, including profit distributions and trade and service related foreign exchange transactions, can be made in foreign currencies without prior approval from State Administration of Foreign Exchange (the “SAFE”) or its local branches. However, where RMB is to be converted into foreign currency and remitted out of China to pay capital expenses, such as the repayment of loans denominated in foreign currencies, approval from or registration with competent government authorities or its authorized banks is required. The PRC government may take measures at its discretion from time to time to restrict access to foreign currencies for current account or capital account transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demands, we may not be able to pay dividends in foreign currencies to our offshore intermediary holding companies or ultimate parent company, and therefore, our shareholders or investors in our ADSs. Further, we cannot assure you that new regulations or policies will not be promulgated in the future, which may further restrict the remittance of RMB into or out of the PRC. We cannot assure you, in light of the restrictions in place, or any amendment to be made from time to time, that our current or future PRC subsidiaries will be able to satisfy their respective payment obligations that are denominated in foreign currencies, including the remittance of dividends outside of the PRC. See “Item 4. Information on the Company — B. Business Overview — Regulation — Regulations on Foreign Exchange” in our 2020 Form 20-F.
If any of our subsidiaries incurs debt on its own behalf in the future, the instruments governing such debt may restrict its ability to pay dividends to us. In addition, our PRC subsidiaries are required to make appropriations to certain statutory reserve funds, which are not distributable as cash dividends except in the event of a solvent liquidation of the companies.
For PRC and United States federal income tax considerations of an investment in the ADSs, see “Taxation.”
Public Offering and Listing in Hong Kong
We are offering 5,500,000 Class A ordinary shares, par value US$0.00025 per share, and the Selling Shareholder is offering 5,500,000 Class A ordinary shares (to be converted from Class B ordinary shares prior to the listing of our Class A ordinary shares on the Hong Kong Stock Exchange), as part of a Global Offering, consisting of an international offering of 9,900,000 Class A ordinary shares offered hereby, and a Hong Kong public offering of 1,100,000 Class A ordinary shares. The international offering contemplated herein consists of a U.S. offering and a non-U.S. offering made outside the U.S. in accordance with applicable law. We are paying a registration fee for ordinary shares sold in the United States, as well as for Class A ordinary shares initially offered and sold outside the United States in the Global Offering that may be resold from time to time in the United States.
Approval-in-principal has been granted by the Hong Kong Stock Exchange pursuant to the Hong Kong Stock Exchange Listing Rules for the listing of, and permission to deal in, our Class A ordinary shares under the stock code “9898.”
 
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Fungibility and Exchanges between ADSs and Class A Ordinary Shares
All Class A ordinary shares offered in both the international offering and the Hong Kong public offering will be registered on the Hong Kong share register in order to be listed and traded on the Hong Kong Stock Exchange. Holders of Class A ordinary shares registered on the Hong Kong share register will be able to convert these Class A ordinary shares into ADSs, and vice versa. See “Conversion Between Class A Ordinary Shares and ADSs.”
In connection with the Hong Kong public offering, and to facilitate fungibility and conversion between ADSs and Class A ordinary shares and trading between the Nasdaq and the Hong Kong Stock Exchange, we intend to move a portion of our issued Class A ordinary shares from our register of members maintained in the Cayman Islands to our Hong Kong share register.
It is unclear whether, as a matter of Hong Kong law, the trading or conversion of ADSs constitutes a sale or purchase of the underlying Hong Kong-registered ordinary shares that is subject to Hong Kong stamp duty. We advise investors to consult their own tax advisors on this matter. See “Risk Factors — Risks Relating to the Global Offering — There is uncertainty as to whether Hong Kong stamp duty will apply to the trading or conversion of our ADSs following our initial public offering in Hong Kong and the listing of our Class A ordinary shares on the Hong Kong Stock Exchange.”
Corporate Information
Our principal executive offices are located at 8/F, QIHAO Plaza, No. 8 Xinyuan S. Road, Chaoyang District, Beijing 100027, People’s Republic of China. Our telephone number at this address is +86 (10) 5898-3095. Our registered office in the Cayman Islands is located at the offices of Vistra (Cayman) Limited, P.O. Box 31119 Grand Pavilion, Hibiscus Way, 802 West Bay Road, Grand Cayman, KY1-1205, Cayman Islands. Our agent for service of process in the United States is Cogency Global Inc., located at 122 East 42nd Street, 18th Floor, New York, NY 10168.
Investors should submit any inquiries to the address and telephone number of our principal executive offices. Our corporate internet address is http://ir.weibo.com. The information contained on our website is not a part of this prospectus supplement. Information appearing on our website is not incorporated by reference into this prospectus supplement or the accompanying prospectus.
RECENT DEVELOPMENT
Financial Results for the Nine Months Ended September 30, 2021
The following table sets forth a summary of our consolidated results of operations for the periods presented. This information should be read together with our unaudited interim condensed consolidated financial statements in Exhibit 99.3 to our current report on Form 6-K furnished to the SEC on November 18, 2021, titled “Unaudited condensed consolidated financial statements of Weibo Corporation as of and for the nine months ended September 30, 2021.” The results of operations in any period are not necessarily indicative of our future trends.
 
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For the Nine Months Ended September 30,
2020
2021
(In US$ thousands, except for per share and per ADS data)
(Unaudited)
(Unaudited)
Interim Condensed Consolidated Statements of Operations
Data:
Revenues:
Advertising and marketing revenues:
Third parties
852,263 1,198,168
Alibaba(1)
112,906 134,892
SINA
34,149 58,178
Other related parties
33,360 38,731
Subtotal
1,032,678 1,429,969
Value-added services revenues
143,843 210,827
Total revenues
1,176,521 1,640,796
Costs and expenses:
Cost of revenues(2)
214,892 275,296
Sales and marketing(2)
316,483 439,207
Product development(2)
233,881 316,806
General and administrative(2)
86,111 94,597
Total costs and expenses
851,367 1,125,906
Income from operations
325,154 514,890
Income from equity method investments
4,422 17,688
Realized gain from investments
848 1,299
Fair value changes through earnings on investments, net
127,641 (33,073)
Investment related impairment(3)
(117,835) (102,594)
Interest income
65,667 56,909
Interest expense
(39,677) (53,255)
Other income, net
3,889 3,147
Income before income tax expenses
370,109 405,011
Less: Provision of income taxes
86,630 93,260
Net income
283,479 311,751
Less: Net loss attributable to non-controlling interests
(843) (835)
Net income attributable to Weibo’s shareholders
284,322 312,586
Shares used in computing net income per share attributable to Weibo’s shareholders:
Basic
226,728 228,185
Diluted
227,352 229,765
Income per ordinary share:
Basic
1.25 1.37
Diluted
1.25 1.36
Income per ADS(4):
Basic
1.25 1.37
Diluted
1.25 1.36
Notes:
(1)
We recorded US$92.5 million and US$94.1 million in advertising and marketing revenues from Alibaba for the nine months ended September 30, 2020 and 2021, respectively. Moreover, one of Alibaba’s subsidiaries engaged in the business of advertising agency and contributed another US$20.4 million and US$40.8 million to our total revenues for the nine months ended September 30, 2020 and 2021, respectively.
 
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For the Nine Months Ended
September 30,
2020
2021
(in US$ thousands)
(Unaudited)
(Unaudited)
(2)
Stock-based compensation in each category:
Cost of revenues
3,909 5,690
Sales and marketing
6,886 10,249
Product development
22,890 29,260
General and administrative
14,100 16,059
Total
47,785 61,258
(3)
Investment related impairment includes impairment charges to equity investments, investment prepayments and loans to and interest receivable from related parties.
(4)
Each ADS represents one Class A ordinary share.
Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020
Net Revenues
Our revenues increased by 39% from US$1,176.5 million in the nine months ended September 30, 2020 to US$1,640.8 million in the nine months ended September 30, 2021.

Advertising and marketing revenues.   Advertising and marketing revenues increased by 38% from US$1,032.7 million in the nine months ended September 30, 2020 to US$1,430.0 million in the nine months ended September 30, 2021. Mobile advertising revenues accounted for approximately 93% of our total advertising and marketing revenues in the nine months ended September 30, 2021, compared to 90% in the nine months ended September 30, 2020, benefiting from the growth of advertiser preferences. The total number of advertisers was 0.8 million in the nine months ended September 30, 2021, compared to 1.4 million in the nine months ended September 30, 2020, while the average spending per advertiser (excluding Alibaba) increased by 152% from US$649 in the nine months ended September 30, 2020 to US$1,637 in the nine months ended September 30, 2021, both of which were primarily due to the churn of individual customers with relatively lower advertising budgets.
Revenues from advertising customers (excluding Alibaba) increased by 42% from US$940.2 million in the nine months ended September 30, 2020 to US$1,335.9 million in the nine months ended September 30, 2021, primarily attributable to a broad-based increase in advertising demand and strong sales execution. Revenues generated from Alibaba as an advertiser increased by 2% from US$92.5 million in the nine months ended September 30, 2020 to US$94.1 million in the nine months ended September 30, 2021. The advertising spending from Alibaba highly correlates to its own business operation, especially its marketing strategies, which fluctuates from time to time.

Value-added services revenues.   Value-added services revenues increased by 47% from US$143.8 million in the nine months ended September 30, 2020 to US$210.8 million in the nine months ended September 30, 2021. The increase primarily attributable to the increase of game-related revenues from US$0.9 million for the nine months ended September 30, 2020 to US$78.1 million for the nine months ended September 30, 2021, contributed by the interactive entertainment company acquired in the fourth quarter of 2020 and incremental revenues from online game services, partially offset by the decrease of revenue from live streaming business from US$30.7 million to US$11.9 million as a result of intense market competitions.
Costs and Expenses
Our costs and expenses increased by 32% from US$851.4 million in the nine months ended September 30, 2020 to US$1,125.9 million in the nine months ended September 30, 2021.
 
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Cost of Revenues.   Cost of revenues increased by 28% from US$214.9 million in the nine months ended September 30, 2020 to US$275.3 million in the nine months ended September 30, 2021. The increase was primarily due to an increase of US$22.4 million in labor cost, an increase of US$11.4 million in advertisement production cost, an increase of US$6.6 million in revenue share cost, an increase of US$6.6 million in turnover taxes, and an increase of US$6.2 million in content cost.

Sales and Marketing.   Our sales and marketing expenses increased by 39% from US$316.5 million in the nine months ended September 30, 2020 to US$439.2 million in the nine months ended September 30, 2021. The increase was primarily due to an increase of US$82.7 million in marketing spend and promotional activities, and an increase of US$34.0 million in personnel-related expenses.

Product Development.   Our product development expenses increased by 35% from US$233.9 million in the nine months ended September 30, 2020 to US$316.8 million in the nine months ended September 30, 2021. The increase was primarily attributable to an increase of US$54.9 million in personnel-related expenses, an increase of US$6.4 million in stock-based compensation, and an increase of US$13.4 million in amortization of intangible assets.

General and Administrative.   Our general and administrative expenses increased by 10% from US$86.1 million in the nine months ended September 30, 2020 to US$94.6 million in the nine months ended September 30, 2021. The increase was primarily due to the increase of US$35.8 million in personnel-related expenses and an increase of US$6.5 million in professional services fees. The increase was partially offset by a decrease of US$39.7 million in provision of allowance for credit losses.
Investment Related Impairment
We perform impairment assessments of our investments and determine if an investment is impaired due to changes in quoted market price or other impairment indicators. We recorded US$117.8 million and US$102.6 million in investment related impairment charges in the nine months ended September 30, 2020 and 2021, respectively, as the investments were not performing to expectations or they became incapable of making repayments.
Interest Income and Interest Expense
Compared to the interest expense for the nine months ended September 30, 2020, the increase in interest expense for the nine months ended September 30, 2021 was mainly due to the 2030 Notes issued in July 2020.
Provision of Income Taxes
The following table sets forth current and deferred portion of income tax expense of the Company and the effective tax rate for China operations:
For the Nine Months Ended
September 30
2020
2021
(in US$ thousands, except percentage)
(Unaudited)
(Unaudited)
Deferred tax provisions (benefits)
11,682 (11,546)
Current income tax expenses
74,948 104,806
Income tax expenses
86,630 93,260
 
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For the Nine Months Ended
September 30
2020
2021
(in US$ thousands, except percentage)
(Unaudited)
(Unaudited)
Income tax expenses (benefits) applicable to non-China operations
12,358 (9,757)
Income tax expenses applicable to China operations
74,272 103,017
Income from China operation
305,630 603,409
Effective tax rate for China operations
24.3% 17.1%
We recorded income taxes of US$86.6 million and US$93.3 million in the nine months ended September 30, 2020 and 2021, respectively. The provision for income taxes for China operations differs from the amounts computed by applying the statutory EIT rate mostly due to the preferential tax treatment that Weibo Technology enjoyed as a qualified “high and new technology enterprise” during the periods presented.
Cash Flow Data
The following table sets forth the movements of our cash and cash equivalents for the periods presented:
For the Nine Months Ended
September 30
2020
2021
(in US$ thousands, except percentage)
(Unaudited)
(Unaudited)
Net cash provided by operating activities
420,495 564,352
Net cash used in investing activities
(1,240,855) (567,860)
Net cash provided by financing activities
741,963 1,214
Effect of exchange rate changes on cash and cash equivalents
37,341 16,141
Net increase (decrease) in cash and cash equivalents
(41,056) 13,847
Cash and cash equivalents at the beginning of the year/period
1,452,985 1,814,844
Cash and cash equivalents at the end of the period
1,411,929 1,828,691
As of December 31, 2020, and September 30, 2021, our total cash, cash equivalents and short-term investments were US$3,496.9 million and US$2,707.2 million (unaudited), respectively. Our principal sources of liquidity have been net proceeds from cash from operations and issuance of unsecured senior notes.
Net cash provided by operating activities for the nine months ended September 30, 2021 was US$564.4 million, which consists of our net income of US$311.8 million as adjusted for non-cash items and the effects of changes in operating assets and liabilities. Adjustments for non-cash items primarily include a non-cash investment related impairment of US$102.6 million, a charge of US$61.3 million in stock-based compensation, a charge of US$40.2 million in depreciation and amortization and a net loss of US$33.1 million in fair value changes through earnings on investments. The principal items accounting for the changes in operating assets and liabilities include an increase of US$190.3 million in accrued and other liabilities, a decrease of US$38.7 million in amount due from Alibaba, and an increase of US$24.3 million in accounts payable, partially offset by an increase of US$241.3 million in accounts receivable due from third parties.
Net cash used in investing activities for the nine months ended September 30, 2021 was US$567.9 million. This was primarily attributable to cash paid on long-term investments of US$1,471.3 million, purchases of bank time deposits and wealth management products of US$560.2 million, prepayment for purchase of SINA Plaza of US$132.5 million, net cash paid for acquisitions of US$61.2 million, partially offset by maturities of bank time deposits and wealth management products of US$1,371.9 million, proceeds from the disposal and refund of prepayment on long-term investments of US$242.6 million, and net repayment of loan by SINA of US$66.4 million.
 
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Net cash provided by financing activities for the nine months ended September 30, 2021 was US$1.2 million, which consists of proceeds from the exercise of employee stock options.
Capital Expenditures
Our capital expenditures primarily consist of purchases of servers, computers and other office equipment. Our capital expenditures were US$23.8 million for the nine months ended September 30, 2021. We will continue to make capital expenditures for the future growth of our business and we intend to fund these purchase in the future with existing cash balance.
Key Operating Metrics
Our MAUs increased from 511 million in September 2020 to 573 million in September 2021. Mobile MAUs represented 94% of MAUs. Our average DAUs increased from 224 million in September 2020 to 248 million in September 2021. The ratio of average DAUs to MAUs in September 2021 remained stable at 43%.
RECENT REGULATORY DEVELOPMENTS
On July 30, 2021, the State Council promulgated the Regulations on Security Protection of Critical Information Infrastructure, effective on September 1, 2021, which provides that a “critical information infrastructure” has the meaning of an important network facility and information system in important industries such as, among others, public communications and information services, as well as other important network facilities and information systems that may seriously endanger national security, the national economy, the people’s livelihood, or the public interests in the event of damage, loss of function, or data leakage. The competent governmental departments and supervision and management departments of the aforementioned important industries will be responsible for organizing the identification of critical information infrastructures in their respective industries.
On July 10, 2021, the CAC published a discussion draft of the amended Measures for Cybersecurity Review, which provides that certain operators of critical information infrastructure purchasing network products and services, and data processors (together with the operators of critical information infrastructure, the “Operators”) carrying out data processing activities, which affect or may affect national security, or Operators holding over one million users’ personal information when listing abroad, must apply with the Cybersecurity Review Office for a cybersecurity review. As a major internet platform, we are at risk of being deemed to be an Operator, which, however, is subject to significant uncertainties as explained below.

Under the current PRC cybersecurity laws and the draft of the amended Measures for Cybersecurity Review, operators of “critical information infrastructure” that intend to purchase internet products and services that will or may affect national security must apply for a cybersecurity review. However, as advised by our PRC legal adviser, TransAsia Lawyers, although several PRC laws and regulations have provided the definition of “critical information infrastructure,” the scope of potential operators of “critical information infrastructure” remains broad and unclear and the identification of any specific critical information infrastructure is subject to industry-specific identification rules promulgated by relevant regulators and the notice from the relevant regulators, pursuant to the Regulations on Security Protection of Critical Information Infrastructure. In addition, the definition and scope of activities of data processing that will or may affect national security is similarly unclear and subject to the regulatory interpretation.

Although the internet products and services we purchase are primarily bandwidth, copyright content and marketing services, we may be subject to cybersecurity review when purchasing them in the future. As of the date of this prospectus supplement, we have not been involved in any investigations or cybersecurity reviews by the CAC for making those purchases of internet products and services, and we have not received any inquiry, notice, warning, or sanction in such respect.
An Operator could be required to fulfill various obligations, including setting up a special security management organization, organizing regular cybersecurity education and training, formulating emergency
 
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plans for cybersecurity incidents and conducting regular emergency drills, and we have already performed the aforementioned measures. If we are deemed to be an operator of “critical information infrastructure” and a data processor meeting the above criteria under PRC cybersecurity laws, we would be required to fulfill various obligations as required under PRC cybersecurity laws and other applicable laws specifically for operators of “critical information infrastructure” and a cybersecurity review for our activities would be required, which may disrupt our operations and adversely affect our business, results of operations and financial condition. We have not fulfilled obligations that are only applicable and available if being recognized as an operator of “critical information infrastructure” such as conducting network security inspections and risk assessments on critical information infrastructure at least once a year either through self-assessment or through a cybersecurity service agency, timely correcting any security issues discovered, and reporting relevant matters as required by the security protection departments. As we have not been notified that we are recognized as an operator of critical information infrastructure by any PRC regulatory authority as of the date of this prospectus supplement, these obligations are currently not applicable to us. In addition, we have not been involved in any investigations or cybersecurity reviews by the CAC as an operator of “critical information infrastructure” during 2018, 2019, 2020 and the six months ended June 30, 2021 and up to the date of this prospectus supplement, and we have not received any inquiry, notice, warning or sanction in such respect. Additional compliance efforts could disrupt our operations and adversely affect our business, results of operations and financial condition.
As there is no timetable as when this discussion draft of the amended Measures for Cybersecurity Review will be enacted, substantial uncertainties exist with respect to its enactment timetable, final content, interpretation and implementation.
On November 14, 2021, the CAC published a discussion draft of the Administrative Measures for Internet Data Security, or the Draft Measures for Internet Data Security, which requires a data processor to apply for cybersecurity review, among others, in the event of its listing in Hong Kong which affects or may affect national security. As of the date of this prospectus supplement, this draft has not been formally adopted. Our PRC legal adviser, TransAsia Lawyers, is of the view that substantial uncertainties exist with respect to the enactment timetable, final content, interpretation and implementation, especially the detailed interpretation of the standard for determining whether a listing in Hong Kong “affects or may affect national security”. If the Draft Measures for Internet Data Security is enacted as proposed, in the event that any of our capital raising activities is required to apply for cybersecurity review, we will need to obtain approval or clearance from the regulatory authorities, which is subject to uncertainties.
 
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THE GLOBAL OFFERING
Public Offering Price
HK$272.80, or US$35.01, per Class A ordinary share
The Global Offering
We and the Selling Shareholder are offering 11,000,000 Class A ordinary shares in the Global Offering, consisting of an international offering of 9,900,000 Class A ordinary shares offered hereby, and a Hong Kong public offering of 1,100,000 Class A ordinary shares. For more information, see “Underwriting.”
Options to Purchase Additional Class A Ordinary Shares from the Selling Shareholder
The Selling Shareholder has granted the international underwriters an option, exercisable by the Joint Representatives, on behalf of the international underwriters, until 30 days after the last day for the lodging of applications under the Hong Kong public offering, to purchase up to an additional 1,650,000 Class A ordinary shares to be converted from 1,650,000 Class B ordinary shares at the public offering price. Goldman Sachs International, an affiliate of Goldman Sachs (Asia) L.L.C, has entered into a borrowing arrangement with WB HZGS Estate (Hong Kong) Limited to facilitate the settlement of over-allocations.
Ordinary Shares Outstanding Immediately After the Global Offering
138,312,831 Class A ordinary shares and 96,278,958 Class B ordinary shares (or 139,962,831 Class A ordinary shares and 94,628,958 Class B ordinary shares if the Joint Representative exercise in full, on behalf of the international underwriters, their option to purchase additional Class A ordinary shares), excluding (i) 8,700,524 Class A ordinary shares issuable upon the exercise of options outstanding under our share incentive plan as of September 30, 2021, the most recent practicable date and (ii) ordinary shares issuable upon conversion of our convertible senior notes, as of the date of this prospectus supplement.
Use of Proceeds
We estimate that we will receive net proceeds from the Global Offering of approximately HK$1,383.4 million, or US$177.6 million, after deducting underwriting fees and the offering expenses payable by us.
We will not receive any proceeds from the sale of ordinary shares by the Selling Shareholder.
We expect to use the net proceeds from the Global Offering for continuing to grow our user base and user engagement, and enhance our content ecosystem, for research and development to enhance our user experience and monetization capabilities, for selectively pursuing strategic alliances, investments and acquisitions, and for working capital and general corporate purposes.
See “Use of Proceeds” for more information.
Lock-up
We, our directors and executive officers and principal shareholders have agreed with the underwriters not to offer, pledge, issue, sell, contract to sell, sell any option or contract to
 
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option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any ADSs, Class A ordinary shares or similar securities for a period commencing on the date of International Underwriting Agreement and ending on, and including, the date that is 90 days after December 8, 2021, or the Listing Date, subject to certain exceptions. See “Shares Eligible for Future Sales” and “Underwriting” for more information.
Risk Factors
You should carefully read “Risk Factors” beginning on page S-24 and the other information included in this prospectus supplement and the accompanying prospectus, our 2020 Form 20-F, Exhibit 99.1 to our current report on Form 6-K furnished to the SEC on November 18, 2021, as well as other documents incorporated by reference herein and therein, for a discussion of factors you should carefully consider before deciding to invest in our Class A ordinary shares.
Hong Kong Stock Exchange Code for the Class A Ordinary Shares
9898
Payment and Settlement
The underwriters expect to deliver the Class A ordinary shares against payment therefor through the facilities of the Central Clearing and Settlement System on or around December 8, 2021.
Selling Shareholder
Sina Corporation
 
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RISK FACTORS
An investment in our Class A ordinary shares involves significant risks. You should carefully consider the risks described below together with the risks described in our 2020 Form 20-F, Exhibit 99.1 to our current report on Form 6-K furnished to the SEC on November 18, 2021, as amended, and the other information contained in this prospectus supplement and the accompanying prospectus, including the documents incorporated by reference. Any of these risks could have a material adverse effect on our business, financial condition, and results of operations. In any such case, the market price of our Class A ordinary shares could decline, and you may lose all or part of your investment.
Please see “Where You Can Find More Information” and “Incorporation of Certain Documents by Reference” for information on where you can find the documents we have filed with or furnished to the SEC and which are incorporated by reference in this prospectus supplement.
Risks Relating to Doing Business in China
Regulation and censorship of information disseminated over the internet in China may adversely affect our business and subject us to liability for information displayed on Weibo, or Yizhibo.
The PRC government has adopted regulations governing internet access and the distribution of information over the internet. Under these regulations, internet content providers and internet publishers are prohibited from posting or displaying the internet content that, among other things, impairs the national dignity of China, is reactionary, obscene, superstitious, fraudulent or defamatory, or otherwise violates PRC laws and regulations. Failure to comply with these requirements may result in the revocation of licenses to provide internet content and other licenses and the closure of the concerned websites and levy of fines. The website operator may also be held liable for such censored information displayed on or linked to the website.
In addition, the MIIT has published regulations that subject website operators to potential liability for content displayed on their websites and for the actions of users and others using their systems, including liability for violations of PRC laws prohibiting the dissemination of content deemed to be socially destabilizing. The Ministry of Public Security has the authority to order any local internet service provider to block any internet website at its sole discretion. From time to time, the Ministry of Public Security stops the dissemination over the internet of information which it believes to be socially destabilizing. The State Administration for the Protection of State Secrets is also authorized to block any website it deems to be leaking state secrets or failing to meet the relevant regulations relating to the protection of state secrets in the dissemination of online information. The CAC set up in May 2011 to supervise internet content management nationwide, has also promulgated regulations and taken a number of other measures to regulate and monitor online content.
Although we attempt to monitor the content posted by users on Weibo and Yizhibo, we are not able to effectively control or restrict content generated or placed on Weibo or Yizhibo by our users. In particular, with various features such as posts, comments and chat groups and the growing popularity of multimedia content, such as photos, videos and live streaming, and long-form articles, content monitoring has become much more complicated and challenging than text-based feeds.
To the extent that PRC regulatory authorities find any content displayed on Weibo or Yizhibo objectionable, they may require us to limit, prevent, or eliminate the dissemination of such information on our platform. The CAC launched the “Clear and Bright” campaign to rectify various areas of online misconduct in May 2021, in response to which, certain polices were issued and actions were launched. On June 15, 2021, the CAC launched the “Fan Group Chaos Rectification” special action, followed by issuance of the Notice on Further Strengthening the Management of Chaos in Fan Groups on August 25, 2021. Both of the special action and notice are intended to modify behavior in the online fan groups for celebrities, specifically, in features such as celebrity rankings, hot topics, fan communities, and fans interactive functions, so as to curb verbal abuse, stigmatization, instigation, confrontation, insults, slander, rumors, malicious marketing and the spread of other harmful information. This notice requested, among other things, the cancellation of all rankings of celebrities. The rankings of music, film and television works are still allowed, but the network platforms should optimize and adjust ranking rules to focus on the art works themselves
 
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and to base rankings on professional evaluation. Furthermore, minors are not allowed to make virtual gifting or spend money on supporting idols, or act as the organizer or manager of a fan group. As of the date of this prospectus supplement, we have taken measures specified in this notice to the extent applicable to our business, including removing the function of the “star power list” on our platform. In August 2021, we started to conduct self-examinations and self-rectifications in response to the PRC regulatory authorities’ recent regulatory focus on financial blogs. We have identified and rectified certain for-profit bloggers, including KOLs, with inappropriate nicknames, self-descriptions, marketing events, and publication of financial and economics related information. We have publicly disclosed the rectification results on our platform, and established a hotline for users to report any inappropriate events. Failure to comply with the requirements from PRC regulatory authorities on content regulation may subject us to liabilities and penalties and may even result in the temporary blockage or complete shutdown of our online operations. During 2018, 2019, 2020 and the six months ended June 30, 2021, we received 43 penalties for inappropriate or illegal content transmitted on our platform, and we have cooperated with the relevant government authorities to take corrective measures in all cases. For example, in June 2020, CAC imposed a fine of RMB500,000 on us for failing to timely discover and remove user posts violating PRC laws and regulations from our platform, and required us to rectify and suspend the operation of Weibo hot search feature for one week. During 2018, 2019, 2020 and the six months ended June 30, 2021, we have received an aggregate penalties of RMB11.3 million for disseminating illegal content on our platform from the relevant regulatory authorities. We believe these past incidents, individually or in the aggregate, did not have a material adverse effect on our business, financial condition or results of operations during 2018, 2019, 2020 and the six months ended June 30, 2021. However, government standards and interpretations may change in a manner that could render our current monitoring and managing efforts insufficient.
The PRC government has wide discretion in regulating online activities and, irrespective of our efforts to control the content on our platform, government campaigns and other actions to reduce inappropriate or illegal content and activities could subject us to negative press or regulatory challenges and sanctions, including imposition of fines, suspension or revocation of our licenses to operate in China or a ban of our platform, including closure of one or more parts of or our entire business. On October 26, 2021, the CAC issued the Notice on Further Strengthening the Regulation on Online Information of Entertainment Celebrities, which requests internet platforms to, among others, monitor information posted by celebrities online so as to timely identify hot topics that may involve illegal actions and to promptly report to the competent authorities in such event. If government actions or sanctions are brought against us, or if there are widespread rumors about any actual or potential government actions or sanctions against us, our reputation could be harmed, we may lose users and other customers, and our revenues and results of operation may be materially and adversely affected.
In addition, the Judicial Interpretation on the Application of Law in Trial of Online Defamation and Other Online Crimes jointly promulgated by the Supreme People’s Court and Supreme People’s Procuratorate, which became effective on September 10, 2013, imposes up to a five-year prison sentence on internet users who fabricate or knowingly share defamatory false information online. The implementation of this judicial interpretation may have a significant and adverse effect on the traffic of our platform and discourage the creation of user-generated content, which in turn may impact the results of our operations and ultimately the trading price of our listed securities. Regulation and censorship of information disseminated over the internet in China may adversely affect our user experience and reduce users’ engagement and activities on our platform as well as adversely affect our ability to attract new users to our platform. Any and all of these adverse impacts may ultimately materially and adversely affect our business and results of operations.
Our ADSs may be delisted under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect auditors who are located in China. The delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment. Additionally, the inability of the PCAOB to conduct inspections deprives our investors with the benefits of such inspections.
The Holding Foreign Companies Accountable Act, or the HFCA Act, was enacted on December 18, 2020. The HFCA Act states if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for three consecutive years beginning in 2021, the SEC shall prohibit our shares or ADSs from being traded on a national securities exchange or in the over the counter trading market in the U.S. On November 5, 2021, the SEC approved the
 
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PCAOB rule that provides a framework for the PCAOB to determine whether it is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction. The rule states that the PCAOB will make these determinations promptly.
Our auditor, the independent registered public accounting firm that issues the audit report included in our 2020 Form 20-F, as an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. Since our auditor is located in China, a jurisdiction where the PCAOB has been unable to conduct inspections without the approval of the Chinese authorities, our auditor is currently not inspected by the PCAOB.
On March 24, 2021, the SEC has adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the HFCA Act. We will be required to comply with these rules if the SEC identifies us as having a “non-inspection” year under a process to be subsequently established by the SEC. The SEC is assessing how to implement other requirements of the HFCA Act, including the listing and trading prohibition requirements described above.
On June 22, 2021, the U.S. Senate passed a bill which, if passed by the U.S. House of Representatives and signed into law, would reduce the number of consecutive non-inspection years required for triggering the prohibitions under the HFCA Act from three years to two.
The SEC may propose additional rules or guidance that could impact us if our auditor that issued the audit report included in our annual report on Form 20-F is not subject to PCAOB inspection. For example, on August 6, 2020, the President’s Working Group on Financial Markets, or the PWG, issued the Report on Protecting United States Investors from Significant Risks from Chinese Companies to the then President of the United States. This report recommended the SEC implement five recommendations to address companies from jurisdictions that do not provide the PCAOB with sufficient access to fulfil its statutory mandate. Some of the concepts of these recommendations were implemented with the enactment of the HFCA Act. However, some of the recommendations were more stringent than the HFCA Act. For example, if a company was not subject to PCAOB inspection, the report recommended that the transition period before a company would be delisted would end on January 1, 2022.
The SEC has announced that the SEC staff is preparing a consolidated proposal for the rules regarding the implementation of the HFCA Act and to address the recommendations in the PWG report. It is unclear when the SEC will complete its rulemaking and when such rules will become effective and what, if any, of the PWG recommendations will be adopted. The implications of this possible regulation in addition the requirements of the HFCA Act are uncertain. Such uncertainty could cause the market price of our ADSs to be materially and adversely affected, and our securities could be delisted or prohibited from being traded “over-the-counter” earlier than would be required by the HFCA Act. If our securities are unable to be listed on another securities exchange by then, such a delisting would substantially impair your ability to sell or purchase our ADSs when you wish to do so, and the risk and uncertainty associated with a potential delisting would have a negative impact on the price of our ADSs.
The PCAOB’s inability to conduct inspections in China prevents it from fully evaluating the audits and quality control procedures of our independent registered public accounting firm. As a result, we and investors in our ordinary shares are deprived of the benefits of such PCAOB inspections. The inability of the PCAOB to conduct inspections of auditors in China makes it more difficult to evaluate the effectiveness of our independent registered public accounting firm’s audit procedures or quality control procedures as compared to auditors outside of China that are subject to the PCAOB inspections, which could cause investors and potential investors in our stock to lose confidence in our audit procedures and reported financial information and the quality of our financial statements.
In May 2013, the PCAOB announced that it had entered into a Memorandum of Understanding on Enforcement Cooperation with the CSRC and the PRC Ministry of Finance, which establishes a cooperative framework between the parties for the production and exchange of audit documents relevant to investigations undertaken by the PCAOB in the PRC or by the CSRC or the PRC Ministry of Finance in the United States. The PCAOB continues to be in discussions with the CSRC and the PRC Ministry of
 
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Finance to permit joint inspections in the PRC of audit firms that are registered with the PCAOB and audit Chinese companies that trade on U.S. exchanges.
Risks Relating to Our Shares, Our ADSs and The Listing
As a company applying for listing under Chapter 19C, we adopt different practices as to certain matters as compared with many other companies listed on the Hong Kong Stock Exchange.
As we are applying for a listing under Chapter 19C of the Hong Kong Listing Rules, we will not be subject to certain provisions of the Hong Kong Listing Rules pursuant to Rule 19C.11, including, among others, rules on notifiable transactions, connected transactions, share option schemes, content of financial statements as well as certain other continuing obligations. In addition, in connection with the Listing, we have applied for a number of waivers and/or exemptions from strict compliance with the Hong Kong Listing Rules, the Companies (Winding Up and Miscellaneous Provisions) Ordinance, the Takeovers Codes and the SFO. As a result, we will adopt different practices as to those matters as compared with other companies listed on the Hong Kong Stock Exchange that do not enjoy those exemptions or waivers.
Furthermore, if 55% or more of the total worldwide trading volume, by dollar value, of our Class A ordinary shares and ADSs over our most recent fiscal year takes place on the Hong Kong Stock Exchange, the Hong Kong Stock Exchange will regard us as having a dual primary listing in Hong Kong and we will no longer enjoy certain exemptions or waivers from strict compliance with the requirements under the Hong Kong Listing Rules, the Companies (Winding Up and Miscellaneous Provisions) Ordinance, the Takeovers Codes and the SFO, which could result in us having to amend our corporate structure and our memorandum and articles of association and we may incur of incremental compliance costs.
The trading price for our ADSs has been and is likely to continue be, and the trading price of our Class A ordinary shares can be, volatile, regardless of our operating performance, which could result in substantial losses to holders of our listed securities.
The trading prices of our ADSs has been and is likely to continue to be volatile and could fluctuate widely in response to in response to a variety of factors, many of which are beyond our control. The trading price of our Class A ordinary shares, likewise, can be volatile for similar or different reasons. For example, the trading price of our ADSs ranged from US$28.93 to US$52.33 per ADS in 2020. The trading price of our listed securities is likely to remain volatile and could fluctuate widely due to factors beyond our control. This may happen because of broad market and industry factors, like the performance and fluctuation of the market prices of other companies with business operations located mainly in China that have listed their securities in the United States. A number of Chinese companies have listed or are in the process of listing their securities on stock markets in the United States. The securities of some of these companies have experienced significant volatility, including price declines in connection with their initial public offerings. The trading performances of these Chinese companies’ securities after their offerings may affect the attitudes of investors toward Chinese companies listed in the United States in general and consequently may impact the trading performance of our listed securities, regardless of our actual operating performance.
In addition to market and industry factors, the price and trading volume for our listed securities may be highly volatile for factors specific to our own operations, including (but not limited to) the following:

variations in our revenues, earnings, cash flow and data related to our active user base or user engagement;

announcements of new investments, acquisitions, strategic partnerships or joint ventures;

announcements of new services and expansions by us or our competitors;

changes in financial estimates by securities analysts;

detrimental adverse publicity about us or SINA;

additions or departures of key personnel;

release of lock-up or other transfer restrictions on our outstanding equity securities or sales of additional equity securities; and
 
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potential litigation or regulatory investigations.
Substantial future sales or perceived potential sales of our Class A ordinary shares, ADSs, or other equity or equity-linked securities in the public market could cause the price of our listed securities to decline.
Sales of our Class A ordinary shares, ADSs, or other equity or equity-linked securities in the public market, or the perception that these sales could occur, could cause the market price of our listed securities to decline significantly. All of our Class A ordinary shares represented by ADSs were freely transferable by persons other than our affiliates without restriction or additional registration under the U.S. Securities Act. The Class A ordinary shares held by our affiliates are also available for sale, subject to volume and other restrictions as applicable under Rule 144 of the U.S. Securities Act any applicable lock-up agreement, under trading plans adopted pursuant to Rule 10b5-1 or otherwise. Our controlling shareholders may sell additional shares of us after the expiry of lock-up undertaking given in connection with this Global Offering. We cannot predict what effect, if any, market sales of securities held by our controlling shareholders or any other shareholder or the availability of these securities for future sale will have on the market price of our Shares and ADSs. See “Underwriting” and “Shares Eligible for Future Sale” for more detailed descriptions of the lock-up undertaking by our directors, executive officers and principal shareholders and the restrictions on selling our securities after this Global Offering.
Divesture in the future of our listed securities by shareholders, the announcement of any plan to divest our listed securities, or hedging activity by third-party financial institutions in connection with similar derivative or other financing arrangements entered into by shareholders, could cause the price of our listed securities to decline.
If securities or industry analysts do not publish research or reports about our business, or if they adversely change their recommendations regarding our listed securities, the trading price for our listed securities and trading volume could decline.
The trading market for our listed securities will be influenced by research or reports that industry or securities analysts publish about our business. If one or more analysts who cover us downgrade our listed securities, the trading price for our listed securities would likely decline. If one or more of these analysts cease to cover us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the trading price or trading volume for our listed securities to decline.
The sale or availability for sale, or perceived sale or availability for sale, of substantial amounts of our listed securities could adversely affect their trading price.
Sales of substantial amounts of our listed securities in the public market, or the perception that these sales could occur, could adversely affect the trading price of our listed securities and could materially impair our ability to raise capital through equity offerings in the future. We cannot predict what effect, if any, market sales of securities held by our significant shareholders or any other shareholder or the availability of these securities for future sale will have on the trading price of our listed securities.
Our dual-class voting structure will limit your ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders of our Class A ordinary shares and ADSs may view as beneficial.
Our ordinary shares are divided into Class A ordinary shares and Class B ordinary shares. Holders of Class A ordinary shares are entitled to one vote per share, while holders of Class B ordinary shares are entitled to three votes per share. All of the outstanding ordinary shares held by SINA as of the date of this document are Class B ordinary shares. All other ordinary shares that are outstanding as of the date of this document are Class A ordinary shares. We intend to maintain the dual-class voting structure in the future. Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof. Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. Upon any transfer of Class B ordinary shares by a holder thereof to any person or entity which is not an affiliate (as defined in our third amended and restated memorandum of association and articles of association) of such holder, such Class B ordinary shares shall be automatically and immediately converted
 
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into the equal number of Class A ordinary shares. In addition, each Class B ordinary share shall automatically and immediately be converted into one Class A ordinary share if at any time SINA and its affiliates (as defined in our third amended and restated memorandum of association and articles of association) in the aggregate hold less than five percent (5%) of the issued Class B ordinary shares in our company, and no Class B ordinary shares shall be issued by our company thereafter.
Due to the disparate voting powers attached to these two classes of ordinary shares, SINA owned approximately 44.4% of our total issued and outstanding ordinary shares and 70.6% of the voting power of our outstanding shares as of September 30, 2021. Immediately following the Global Offing, Mr. Charles Chao will control approximately 67.6% of the aggregate voting rights in our Company, assuming the shareholding in the company which he controls through SINA Corporation has remained unchanged since September 30, 2021 and will remain unchanged until SINA Corporation sells shares in this Global Offering, and without taking into account any allotment and issuance of Class A ordinary shares upon the exercise of the over-allotment option. For further details, please see “Principal and Selling Shareholders.” Therefore, SINA will have decisive influence over matters requiring shareholders’ approval, including election of directors and significant corporate transactions, such as a merger or sale of our company. This concentrated control will limit your ability to influence corporate matters and could discourage others from pursuing any potential merger, takeover or other change of control transactions that holders of Class A ordinary shares and ADSs may view as beneficial.
Techniques employed by short sellers may drive down the trading price of our listed securities.
Short selling is the practice of selling securities that the seller does not own but rather has borrowed from a third-party with the intention of buying identical securities back at a later date to return to the lender. The short seller hopes to profit from a decline in the value of the securities between the sale of the borrowed securities and the purchase of the replacement shares, as the short seller expects to pay less in that purchase than it received in the sale. As it is in the short seller’s interest for the price of the security to decline, many short sellers publish, or arrange for the publication of, negative opinions regarding the relevant issuer and its business prospects in order to create negative market momentum and generate profits for themselves after selling a security short. These short attacks have, in the past, led to selling of shares in the market.
Public companies listed in the United States that have substantially all of their operations in China have been the subject of short selling. Much of the scrutiny and negative publicity has centered on allegations of a lack of effective internal control over financial reporting resulting in financial and accounting irregularities and mistakes, inadequate corporate governance policies or a lack of adherence thereto and, in many cases, allegations of fraud. As a result, many of these companies are now conducting internal and external investigations into the allegations and, in the interim, are subject to shareholder lawsuits and/or SEC enforcement actions.
It is not clear what effect such negative publicity could have on us. If we were to become the subject of any unfavorable allegations, whether such allegations are proven to be true or untrue, we could have to expend a significant amount of resources to investigate such allegations and/or defend ourselves. While we would strongly defend against any such short seller attacks, we may be constrained in the manner in which we can proceed against the relevant short seller by principles of freedom of speech, applicable state law or issues of commercial confidentiality. Such a situation could be costly and time-consuming and could distract our management from growing our business. Even if such allegations are ultimately proven to be groundless, allegations against us could severely impact our business operations and stockholder’s equity, and any investment in our listed securities could be greatly reduced or rendered worthless.
Because we do not expect to pay dividends in the foreseeable future, investors must rely on price appreciation of our listed securities for return on their investments.
We currently intend to retain most, if not all, of our available funds and any future earnings to fund the development and growth of our business. As a result, we do not expect to pay any cash dividends in the foreseeable future. Therefore, investors should not rely on an investment in our listed securities as a source for any future dividend income.
 
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Our board of directors has complete discretion as to whether to distribute dividends, subject to Cayman Islands law. In addition, our shareholders may by ordinary resolution declare dividends, but no dividend may exceed the amount recommended by our directors. Under Cayman Islands law, our company may pay dividends only out of either profit or share premium account; provided that in no circumstances may a dividend be paid if this would result in our company being unable to pay its debts as they fall due in the ordinary course of business. Even if our board of directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on, among other things, our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiary, our financial condition, contractual restrictions and other factors deemed relevant by our board of directors. Accordingly, the return to the holders of our listed securities will likely depend entirely upon any future price appreciation of our ADSs. There is no guarantee that our listed securities will appreciate in value in the future or even maintain the price at which the investors purchased these securities. Investors may not realize a return on their investment in our listed securities and may even lose their entire investment.
Our shareholders may be subject to PRC income tax on dividends from us or on any gain realized on the transfer of our listed securities.
Under the Enterprise Income Tax Law and its implementation rules, subject to any applicable tax treaty or similar arrangement between the PRC and the jurisdiction of residence of the holders of our Class A ordinary share and/or ADSs that provides for a different income tax arrangement, PRC withholding tax at the rate of 10% is normally applicable to dividends from PRC sources payable to investors that are non-PRC resident enterprises, which do not have an establishment or place of business in the PRC, or which have such establishment or place of business if the relevant income is not effectively connected with the establishment or place of business. Any gain realized on the transfer of ADSs or shares by such non-PRC resident enterprise investors is also subject to 10% PRC income tax if such gain is regarded as income derived from sources within the PRC, unless a tax treaty or similar arrangement otherwise provides. Under the PRC Individual Income Tax Law and its implementation rules, dividends from sources within the PRC paid to foreign individual investors who are not PRC residents are generally subject to a PRC withholding tax at a rate of 20% and gains from PRC sources realized by such investors on the transfer of American depositary shares or shares are generally subject to 20% PRC income tax, in each case, subject to any reduction or exemption set forth in applicable tax treaties and similar arrangements and PRC laws. Although substantially all of our business operations are in China, it is unclear whether dividends we pay with respect to our listed securities, or the gain realized from the transfer of our listed securities, would be treated as income derived from sources within the PRC and as a result be subject to PRC income tax if we were considered a PRC resident enterprise, as described above. If PRC income tax were imposed on gains realized through the transfer of our listed securities or on dividends paid to our non-PRC resident investors, the value of the investment in our listed securities may be materially and adversely affected. Furthermore, the holders of our listed securities whose jurisdictions of residence have tax treaties or similar arrangements with China may not qualify for benefits under such tax treaties or arrangements.
We may be classified as a passive foreign investment company under U.S. federal income tax law, which could result in adverse consequences to U.S. investors in our Class A ordinary shares or ADSs.
Depending upon the value of our assets, which is determined based, in part, on the market value of our Class A ordinary shares and ADSs, and the nature of our assets and income over time, we could be classified as a passive foreign investment company (a “PFIC”) for U.S. federal income tax purposes. We will be classified as a PFIC for any taxable year if either (i) 75% or more of our gross income for the taxable year is passive income or (ii) 50% or more of the value of our assets (generally determined on the basis of a quarterly average) is attributable to assets that produce or are held for the production of passive income (the “asset test”).
Although the law in this regard is not entirely clear, we treat our VIEs as being owned by us for U.S. federal income tax purposes because we control their management decisions, we are entitled to substantially all of their economic benefits, and we consolidate their results of operations in our consolidated U.S. GAAP financial statements. If it were determined, however, that we do not own our VIEs for U.S. federal income tax purposes, we would likely be treated as a PFIC for our current taxable year and any subsequent
 
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taxable year. Assuming we own our VIEs for U.S. federal income tax purposes and based on our income and assets and the value of our Class A ordinary shares and ADSs, we do not expect to be a PFIC for our current taxable year or for the foreseeable future.
Because PFIC status is a factual determination made annually after the close of each taxable year on the basis of the value of our assets and the composition of our income and assets, there can be no assurance that we will not be a PFIC for the current taxable year or any future taxable year. Fluctuations in the market price of our Class A ordinary shares or ADSs may cause us to become a PFIC for the current or subsequent taxable years because the value of our assets for purposes of the asset test, including the value of our goodwill and unbooked intangibles, may be determined by reference to the market price of our Class A ordinary shares or ADSs from time to time (which may be volatile). In estimating the value of our goodwill and other unbooked intangibles, we have taken into account our current market capitalization. If our market capitalization subsequently declines, we may be classified as a PFIC for the current taxable year or future taxable years. In addition, the composition of our income and assets will be affected by how, and how quickly, we spend our liquid assets, including the proceeds from this offering. Under circumstances where our revenue from activities that produce passive income significantly increases relative to our revenue from activities that produce non-passive income, or where we determine not to deploy significant amounts of cash for active purposes, our risk of becoming classified as a PFIC may substantially increase. Furthermore, because there are uncertainties in the application of the relevant rules, it is possible that the Internal Revenue Service may challenge our classification of certain income or assets as non-passive, or our valuation of our goodwill and other unbooked intangibles, each of which may result in our company becoming classified as a PFIC for the current or subsequent taxable years. If we are a PFIC for any taxable year during which a U.S. investor holds our Class A ordinary shares or ADSs, our PFIC status could result in adverse U.S. federal income tax consequences to such investor. See “Taxation — United States Federal Income Tax Considerations” for further details.
Our memorandum of association and articles of association contain anti-takeover provisions that could have a material adverse effect on the rights of holders of our ordinary shares and ADSs.
Our memorandum of association and articles of association contain provisions to limit the ability of others to acquire control of our company or cause us to engage in change-of-control transactions. These provisions could have the effect of depriving our shareholders of an opportunity to sell their shares at a premium over prevailing market prices by discouraging third parties from seeking to obtain control of our company in a tender offer or similar transaction. For example, our board of directors has the authority, without further action by our shareholders, to issue preferred shares in one or more series and to fix their designations, powers, preferences, privileges, and relative participating, optional or special rights and the qualifications, limitations or restrictions, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences, any or all of which may be greater than the rights associated with our ordinary shares, in the form of ADS or otherwise. Preferred shares could be issued quickly with terms calculated to delay or prevent a change in control of our company or make removal of management more difficult. If our board of directors decides to issue preferred shares, the price of our listed securities may fall and the voting and other rights of the holders of our ordinary shares and ADSs may be materially and adversely affected.
Our shareholders may face difficulties in protecting their interests, and the ability to protect their rights through Hong Kong or U.S. courts may be limited, because we are incorporated under Cayman Islands law.
We are an exempted company incorporated under the laws of the Cayman Islands. Our corporate affairs are governed by our memorandum of association and articles of association, the Cayman Companies Act and the common law of the Cayman Islands. The rights of our shareholders to take action against our directors, actions by our minority shareholders and the fiduciary duties of our directors to our company under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from the common law of England, the decisions of whose courts are of persuasive authority, but are not binding, on a court in the Cayman Islands. The rights of our shareholders and the fiduciary duties of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States or Hong Kong. In particular, the
 
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Cayman Islands has a less developed body of securities laws than the United States. Some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States or a court in Hong Kong.
The Cayman Islands courts are also unlikely:

to recognize or enforce against us judgments of courts of the United States based on certain civil liability provisions of U.S. securities laws; and

to impose liabilities against us, in original actions brought in the Cayman Islands, based on certain civil liability provisions of U.S. securities laws that are penal in nature.
In those circumstances, although there is no statutory enforcement in the Cayman Islands of judgments obtained in the U.S., the courts of the Cayman Islands will recognize and enforce a foreign money judgment of a foreign court of competent jurisdiction without retrial on the merits based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the sum for which judgment has been given provided certain conditions are met. For such a foreign judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive and for a liquidated sum, and must not be in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, and or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy). A Cayman Islands court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere.
Certain corporate governance practices in the Cayman Islands, which is our home country, differ significantly from requirements for companies incorporated in other jurisdictions such as the United States and Hong Kong. To the extent we choose to follow home country practice with respect to corporate governance matters, our shareholders may be afforded less protection than they otherwise would under rules and regulations applicable to U.S. domestic issuers or companies incorporated in Hong Kong.
As a result of all of the above, our public shareholders may have more difficulty in protecting their interests in the face of actions taken by our management, members of our board of directors or our controlling shareholders than they would as public shareholders of a company incorporated in the United States.
Certain judgments obtained against us by our shareholders may not be enforceable.
We are a Cayman Islands exempted company and all of our assets are located outside of the United States. Substantially all of our current operations are conducted in China. In addition, a majority of our directors and senior management named in this document reside outside the United States or Hong Kong. Substantially all of the assets of these persons are located outside the United States. As a result, it may be difficult or impossible for our shareholders to bring an action against us or against these individuals in the United States or Hong Kong in the event that such shareholders believe that their rights have been infringed under the U.S. federal securities laws, Hong Kong laws, or otherwise. Even if such shareholders are successful in bringing an action of this kind, the laws of the Cayman Islands and of China may render such shareholders unable to enforce a judgment against our assets or the assets of our directors and officers.
We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to United States domestic public companies.
Because we are a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including:

the rules under the Exchange Act requiring the filing of quarterly reports on Form 10-Q or current reports on Form 8-K with the SEC;

the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act;
 
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the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time;

the selective disclosure rules by issuers of material nonpublic information under Regulation FD; and

certain audit committee independence requirements in Rule 10A-3 of the Exchange Act.
We are required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we intend to publish our results on a quarterly basis through press releases, distributed pursuant to the rules and regulations of Nasdaq. Press releases relating to financial results and material events will also be furnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers.
In addition, we are permitted by Nasdaq Stock Market Rules to elect to rely, and have elected to rely, on certain exemptions from corporate governance requirements:

that the board of directors be comprised of a majority of independent directors under Nasdaq Rule 5605(b)(1); and

the requirement that an audit committee be comprised of at least three members under Nasdaq Rule 5605(c)(2)(A).
As a result, you may not be afforded the same protections or information, which would be made available to you, were you investing in a U.S. domestic issuer.
Holders of our ADSs may have fewer rights than holders of our Class A ordinary shares and must act through the depositary to exercise those rights.
Holders of our ADSs do not have the same rights as our shareholders and may only exercise the voting rights with respect to the underlying Class A ordinary shares represented by the ADSs in accordance with the provisions of the deposit agreement. Holders of ADSs may not attend general meetings of our shareholders or cast any votes directly at such meetings. Under the deposit agreement, ADS holders must vote by giving voting instructions to the depositary. Under our third amended and restated memorandum of association and articles of association, the minimum notice period required to be given by our company to our registered shareholders for convening a general meeting is 14 days. When a general meeting is convened, ADS holders may not receive sufficient advance notice to enable them to withdraw the Class A ordinary shares underlying their ADSs and become the registered holder of such shares prior to the record date for the general meeting to allow you to attend the general meeting and to vote directly with respect to any specific matter or resolution which is to be considered and voted upon at the general meeting. In addition, under our third amended and restated memorandum of association and articles of association, for the purposes of determining those shareholders who are entitled to attend and vote at any general meeting, our directors may close our register of members and/or fix in advance a record date for such meeting, and such closure of our register of members or the setting of such a record date may prevent ADS holders from withdrawing the shares underlying their ADSs and becoming the registered holder of such shares prior to the record date, so that ADS holders would not be able to attend the general meeting or to vote directly. Where any matter is to be put to a vote at a general meeting, the depositary will endeavor to notify ADS holders of the upcoming vote and will arrange to deliver our voting materials to them. We cannot assure that ADS holders will receive the voting materials in time to ensure that they can instruct the depositary to vote the shares underlying their ADSs. Furthermore, the depositary and its agents will not be responsible for any failure to carry out any instructions to vote, for the manner in which any vote is cast or for the effect of any such vote. As a result, holders of ADSs may not be able to exercise their right to vote and may lack recourse if the underlying Class A ordinary shares represented by their ADSs are not voted as they requested.
If holders of ADSs do not give instructions to the depositary as to how to vote at shareholders’ meetings, except in limited circumstances, the depositary for our ADSs will give us a discretionary proxy to vote the Class A ordinary shares underlying their ADSs, which could adversely affect their interests.
Under the deposit agreement for the ADSs, if holders of ADSs do not timely and properly give voting instructions to the depositary as to how to vote the shares underlying their ADSs at any particular
 
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shareholders’ meeting, the depositary will give us (or our nominee) a discretionary proxy to vote the Class A ordinary shares underlying their ADSs at the shareholders’ meeting unless:

we have failed to timely provide the depositary with notice of meeting and related voting materials;

we have instructed the depositary that we do not wish a discretionary proxy to be given;

we have informed the depositary that there is substantial opposition as to a matter to be voted on at the meeting;

a matter to be voted on at the meeting would have a material adverse impact on shareholders; or

the voting at the meeting is to be made on a show of hands.
The effect of this discretionary proxy is that if holders of ADSs do not timely and properly give voting instructions to the depositary as to how to vote the Class A shares underlying their ADSs at any particular shareholders’ meeting, they cannot prevent the Class A ordinary shares underlying their ADSs from being voted, except under the circumstances described above. This may make it more difficult for holders of ADSs to influence the management of our company. Holders of our ordinary shares are not subject to this discretionary proxy.
You may not receive dividends or other distributions on our ordinary shares and you may not receive any value for them, if it is illegal or impractical to make them available to you.
The depositary of our ADSs has agreed to pay to you the cash dividends or other distributions it or the custodian receives on ordinary shares or other deposited securities underlying our ADSs, after deducting its fees and expenses. You will receive these distributions in proportion to the number of ordinary shares your ADSs represent. However, the depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any holders of ADSs. For example, it would be unlawful to make a distribution to a holder of ADSs if it consists of securities that require registration under the Securities Act but that are not properly registered or distributed under an applicable exemption from registration. The depositary may also determine that it is not feasible to distribute certain property through the mail. Additionally, the value of certain distributions may be less than the cost of mailing them. In these cases, the depositary may determine not to distribute such property. We have no obligation to register under U.S. securities laws any ADSs, ordinary shares, rights or other securities received through such distributions. We also have no obligation to take any other action to permit the distribution of ADSs, ordinary shares, rights or anything else to holders of ADSs. This means that you may not receive distributions we make on our ordinary shares or any value for them if it is illegal or impractical for us to make them available to you. These restrictions may cause a material decline in the value of our ADSs.
Conversion of our convertible notes may dilute the ownership interest of existing shareholders.
We issued US$900 million principal amount of convertible senior notes due 2022 in October 2017. The conversion of some or all of these notes may dilute the ownership interests of existing shareholders. Any sales in the public market of the Class A ordinary shares or ADSs issuable upon such conversion could adversely affect prevailing market prices of our ADSs and Class A ordinary shares. In addition, the existence of the notes may encourage short selling by market participants because the conversion of the notes could depress the market prices of our Class A ordinary shares and ADSs. The prices of our Class A ordinary shares and ADSs could be affected by possible sales of our Class A ordinary shares and ADSs by investors who view the convertible senior notes as a more attractive means of equity participation in us and by hedging or arbitrage trading activity, which we expect to occur involving our Class A ordinary shares and ADSs.
Our ADS holders may be subject to limitations on transfer of their ADSs.
In certain cases, our ADSs are transferable on the books of the depositary. However, the depositary may close its books at any time or from time to time when it deems expedient in connection with the performance of its duties. The depositary may close its books from time to time for a number of reasons, including in connection with corporate events such as a rights offering, during which time the depositary needs to maintain an exact number of ADS holders on its books for a specified period. The depositary may also close its books in emergencies, and on weekends and public holidays. The depositary may refuse to
 
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deliver, transfer or register transfers of our ADSs generally when our share register or the books of the depositary are closed, or at any time if we or the depositary thinks it is advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason.
We incur increased costs as a result of being a public company.
As a public company, we incur significant legal, accounting and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC and the Nasdaq, impose various requirements on the corporate governance practices of public companies. We expect these rules and regulations to increase our legal and financial compliance costs and to make some corporate activities more time-consuming and costlier. Operating as a public company will make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. In addition, we incur additional costs associated with our public company reporting requirements. It may also be more difficult for us to find qualified persons to serve on our board of directors or as executive officers.
We will also incur additional costs as a result of the Listing on the Hong Kong Stock Exchange. We are currently evaluating and monitoring developments with respect to these rules and regulations, and we cannot predict or estimate with any degree of certainty the amount of additional costs we may incur or the timing of such costs.
We have been and we may again be involved in class action lawsuits in the United States in the future. For example, we and certain of our current and former directors and officers were named as defendants in two putative securities class actions filed in the United States District Court for the District of New Jersey: Andrew Goldsmith v. Weibo Corporation. et al., Civil Action No. 2:17-cv-04728-SRC-CLW (filed on June 27, 2017) (“Goldsmith Case”) and Feng Chen v. Weibo Corporation. et al., Civil Action No. 2:17-cv-05694 (filed on August 3, 2017) (“Chen Case”). The Goldsmith Case was purportedly brought on behalf of a class of persons who allegedly suffered damages as a result of their trading in our ADSs between April 27 and June 22, 2017; the Chen Case was purportedly brought on behalf of a class of persons who allegedly suffered damages as a result of their trading in our ADSs between April 28, 2016 and June 19, 2017. Both cases’ complaints alleged that our company’s public filings contained material misstatements and omissions in violation of the federal securities laws. On September 28, 2017, the court entered an order appointing a lead plaintiff and consolidating the two cases. On November 27, 2017, the lead plaintiff filed a consolidated class action complaint. On January 26, 2018, our company and one individual defendant filed a motion to dismiss the amended complaint. On June 6, 2018, the court granted our motion to dismiss the class action complaint. Such lawsuits could divert a significant amount of our management’s attention and other resources from our business and operations, which could harm our results of operations and require us to incur significant expenses to defend the lawsuits. Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations.
Furthermore, our directors and employees may face additional exposure to claims and lawsuits as a result of their position in other public companies. For example, one of our directors, Mr. Daniel Zhang, was named as a defendant in ongoing putative securities class action lawsuits filed in the U.S. against Alibaba Group, a company listed on the New York Stock Exchange (NYSE: BABA), together with certain officers and directors of Alibaba Group, concerning the suspension of Ant Group’s planned initial public offering and certain antitrust developments, which have subsequently been consolidated. All of these cases concern Mr. Zhang in his capacity as the chief executive officer of Alibaba Group. Mr. Zhang was also named as a defendant in ongoing putative securities class action lawsuits filed in the U.S. against another U.S. listed company, which remain in their preliminary stages and concern Mr. Zhang in his capacity as a director of this U.S. listed company. Mr. Charles Chao, our chairman of the board of directors, was named as a defendant in ongoing putative securities class action lawsuits filed in the U.S. against another U.S. listed company in connection with a management buyout, which concern Mr. Chao in his capacity as a director of this public company and as an officer of a buyer group member. The securities class action was dismissed on
 
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September 29, 2021. On October 20, 2021, plaintiffs informed the court that they would not file an amended complaint. As of the date of this document, plaintiffs have not filed a Notice of Appeal. The existence of the litigation, claims, investigations and proceedings against our directors and employees, even if they do not involve our Company, may harm our reputation and adversely affect the trading price of our shares and/or ADSs.
The different characteristics of the capital markets in Hong Kong and the U.S. may negatively affect the trading prices of our listed securities.
Upon the Listing, we will be subject to Hong Kong and Nasdaq listing and regulatory requirements concurrently. The Hong Kong Stock Exchange and Nasdaq have different trading hours, trading characteristics (including trading volume and liquidity), trading and listing rules, and investor bases (including different levels of retail and institutional participation). As a result of these differences, the trading prices of our Class A ordinary shares and our ADSs may not be the same, even allowing for currency differences. Fluctuations in the price of our ADSs due to circumstances peculiar to the U.S. capital markets could materially and adversely affect the price of our Class A ordinary shares, or vice versa. Certain events having significant negative impact specifically on the U.S. capital markets may result in a decline in the trading price of our Class A ordinary shares notwithstanding that such event may not impact the trading prices of securities listed in Hong Kong generally or to the same extent, or vice versa. Because of the different characteristics of the U.S. and Hong Kong capital markets, the historical market prices of our ADSs may not be indicative of the trading performance of our Class A ordinary shares after the Global Offering.
Exchange between our Class A ordinary shares and our ADSs may adversely affect the liquidity and/or trading price of each other.
Our ADSs are currently traded on Nasdaq. Subject to compliance with U.S. securities law and the terms of the deposit agreement, holders of our Class A ordinary shares may deposit Class A ordinary shares with the depositary in exchange for the issuance of our ADSs. Any holder of ADSs may also withdraw the underlying Class A ordinary shares represented by the ADSs pursuant to the terms of the deposit agreement for trading on the Hong Kong Stock Exchange. In the event that a substantial number of Class A ordinary shares are deposited with the depositary in exchange for ADSs or vice versa, the liquidity and trading price of our Class A ordinary shares on the Hong Kong Stock Exchange and our ADSs on the Nasdaq may be adversely affected.
The time required for the exchange between our Class A ordinary shares and ADSs might be longer than expected and investors might not be able to settle or effect any sale of their securities during this period, and the exchange of Class A ordinary shares into ADSs involves costs.
There is no direct trading or settlement between the Nasdaq and the Hong Kong Stock Exchange on which our ADSs and our Class A ordinary shares are respectively traded. In addition, the time differences between Hong Kong and New York, unforeseen market circumstances or other factors may delay the deposit of Class A ordinary shares in exchange for ADSs or the withdrawal of Class A ordinary shares underlying the ADSs. Investors will be prevented from settling or effecting the sale of their securities during such periods of delay. In addition, there is no assurance that any exchange for Class A ordinary shares into ADSs (and vice versa) will be completed in accordance with the timelines that investors may anticipate.
Furthermore, the depositary for the ADSs is entitled to charge holders fees for various services including for the issuance of ADSs upon deposit of Class A ordinary shares, cancelation of ADSs, distributions of cash dividends or other cash distributions, distributions of ADSs pursuant to share dividends or other free share distributions, distributions of securities other than ADSs and annual service fees. As a result, shareholders who exchange Class A ordinary shares into ADSs, and vice versa, may not achieve the level of economic return the shareholders may anticipate.
Risks Relating to the Global Offering
An active trading market for our Class A ordinary shares on the Hong Kong Stock Exchange might not develop or be sustained and trading prices of our Class A ordinary shares might fluctuate significantly.
Following the completion of the Global Offering, we cannot assure you that an active trading market for our Class A ordinary shares on the Hong Kong Stock Exchange will develop or be sustained. The trading
 
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price or liquidity for our ADSs on the Nasdaq might not be indicative of those of our Class A ordinary shares on the Hong Kong Stock Exchange following the completion of the Global Offering. If an active trading market of our Class A ordinary shares on the Hong Kong Stock Exchange does not develop or is not sustained after the Global Offering, the market price and liquidity of our Class A ordinary shares could be materially and adversely affected.
In 2014, the Hong Kong, Shanghai and Shenzhen Stock Exchanges collaborated to create an inter-exchange trading mechanism called Stock Connect that allows international and mainland Chinese investors to trade eligible equity securities listed in each other’s markets through the trading and clearing facilities of their home exchange. Stock Connect currently covers over 2,000 equity securities trading in the Hong Kong, Shanghai and Shenzhen markets. Stock Connect allows mainland Chinese investors to trade directly in eligible equity securities listed on the Hong Kong Stock Exchange, known as Southbound Trading; without Stock Connect, mainland Chinese investors would not otherwise have a direct and established means of engaging in Southbound Trading. In October 2019, the Shanghai and Shenzhen Stock Exchanges separately announced their amended implementation rules in connection with Southbound Trading to include shares of companies with dual class voting structure to be traded through Stock Connect. However, since these rules are relatively new, there remains uncertainty as to the implementation details, especially with respect to shares of those companies with a secondary listing on the Hong Kong Stock Exchange. It is unclear whether and when the Class A ordinary shares of our Company, a company with dual class voting structure with a secondary listing in Hong Kong upon the Listing, will be eligible to be traded through Stock Connect, if at all. The ineligibility or any delay of our Class A ordinary shares for trading through Stock Connect will affect mainland Chinese investors’ ability to trade our Class A ordinary shares and therefore may limit the liquidity of the trading of our Class A ordinary shares on the Hong Kong Stock Exchange.
During the period between pricing and trading of our Class A ordinary shares in connection with this offering, the price of our ADSs traded on Nasdaq may fall, which could result in a fall in the price of our Class A ordinary shares to be traded on the Hong Kong Stock Exchange.
The pricing of the Offer Shares will be determined on the price determination date. However, our Class A ordinary shares will not commence trading on the Hong Kong Stock Exchange until they are delivered, which is expected to be about four Hong Kong business days after the price determination date. As a result, investors may not be able to sell or otherwise deal in our Class A ordinary shares during that period. Accordingly, holders of our Class A ordinary shares are subject to the risk that the trading price of our Class A ordinary shares could fall when trading commences as a result of adverse market conditions or other adverse developments that could occur between the price determination date and the time trading begins. In particular, as our ADSs will continue to be traded on the Nasdaq and their price can be volatile, any fall in the price of our ADSs may result in a fall in the price of our Class A ordinary shares to be traded on the Hong Kong Stock Exchange.
There is uncertainty as to whether Hong Kong stamp duty will apply to the trading or conversion of our ADSs following our initial public offering in Hong Kong and the listing of our Class A ordinary shares on the Hong Kong Stock Exchange.
In connection with our initial public offering of Class A ordinary shares in Hong Kong, or the Hong Kong IPO, we will establish a branch register of members in Hong Kong, or the Hong Kong share register. Our Class A ordinary shares that are traded on the Hong Kong Stock Exchange, including those to be issued in the Hong Kong IPO and those that may be converted from ADSs, will be registered on the Hong Kong share register, and the trading of these Class A ordinary shares on the Hong Kong Stock Exchange will be subject to the Hong Kong stamp duty. To facilitate ADS-ordinary share conversion and trading between the Nasdaq and the Hong Kong Stock Exchange, we also intend to move a portion of our issued Class A ordinary shares from our register of members maintained in the Cayman Islands to our Hong Kong share register.
Under the Hong Kong Stamp Duty Ordinance, any person who effects any sale or purchase of Hong Kong stock, defined as stock the transfer of which is required to be registered in Hong Kong, is required to pay Hong Kong stamp duty. The stamp duty is currently set at a total rate of 0.26% of the greater of the consideration for, or the value of, shares transferred, with 0.13% payable by each of the buyer and the seller.
 
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To the best of our knowledge, Hong Kong stamp duty has not been levied in practice on the trading or conversion of ADSs of companies that are listed in both the United States and Hong Kong and that have maintained all or a portion of their ordinary shares, including ordinary shares underlying ADSs, in their Hong Kong share registers. However, it is unclear whether, as a matter of Hong Kong law, the trading or conversion of ADSs of these dual-listed companies constitutes a sale or purchase of the underlying Hong Kong-registered ordinary shares that is subject to Hong Kong stamp duty. We advise investors to consult their own tax advisors on this matter. If Hong Kong stamp duty is determined by the competent authority to apply to the trading or conversion of our ADSs, the trading price and the value of your investment in our listed securities may be affected.
Purchasers of our Class A ordinary shares in the Global Offering will experience immediate dilution and may experience further dilution if we issue additional Class A ordinary shares in the future.
The initial Public Offer Price of our Class A ordinary shares in Hong Kong is higher than the net tangible assets per Share of the outstanding Class A ordinary shares issued to our existing shareholders immediately prior to the Global Offering. Therefore, purchasers of our Class A ordinary shares in the Global Offering will experience an immediate dilution in terms of the pro forma net tangible asset value. In addition, we may consider offering and issuing additional Class A ordinary shares or equity-related securities in the future to raise additional funds, finance acquisitions or for other purposes. Purchasers of our Class A ordinary shares may experience further dilution in terms of the net tangible asset value per Share if we issue additional Class A ordinary shares in the future at a price that is lower than the net tangible asset value per Share.
 
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CERTAIN FINANCIAL DATA
The selected consolidated statements of comprehensive income data and selected consolidated cash flow data for the years ended December 31, 2018, 2019 and 2020 and selected consolidated balance sheet data as of December 31, 2019 and 2020 are derived from our audited consolidated financial statements included in our 2020 Form 20-F, which is incorporated herein by reference. The following selected consolidated balance sheet data as of December 31, 2018 are derived from our audited consolidated financial statements that have not been included herein and were prepared in accordance with U.S. GAAP.
The selected audited consolidated statements of comprehensive income data and selected audited consolidated cash flow data for the six months ended June 30, 2021 and the selected audited consolidated balance sheet data as of June 30, 2021 are derived from our audited consolidated financial statements included in Exhibit 99.2 to our current report on Form 6-K furnished to the SEC on November 18, 2021, which are incorporated herein by reference. The selected consolidated income statements data and consolidated statements of cash flow data for the six months ended June 30, 2020 have been derived from our audited consolidated financial statements incorporated herein by reference and have been prepared on the same basis as our audited consolidated financial statements for 2020.
You should read the following information in conjunction with (1) our audited consolidated financial statements for the three years ended December 31, 2018, 2019 and 2020 and as of December 31, 2019 and 2020 and related notes and “Item 5. Operating and Financial Review and Prospects” in our 2020 Form 20-F, (2) “Financial Information” in Exhibit 99.1 to our current report on Form 6-K furnished to the SEC on November 18, 2021, (3) our audited consolidated financial statements as of and for the six months ended June 30, 2021 and related notes, as well as our unaudited consolidated financial statements for the six months ended June 30, 2020, included in Exhibit 99.2 to our current report on Form 6-K furnished to the SEC on November 18, 2021, and (4) our unaudited interim condensed consolidated financial statements as of and for the nine months ended September 30, 2021 included in Exhibit 99.3 to our current report on Form 6-K furnished to the SEC on November 18, 2021, as well as the other financial information included elsewhere in this prospectus supplement or the documents incorporated by reference herein. Our historical results for any prior period do not necessarily indicate our results to be expected for any future period.
Selected Consolidated Statements of Operations
The following table sets forth a summary of our consolidated results of operations for the periods presented. The results of operations in any period are not necessarily indicative of our future trends.
 
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For the Year Ended December 31,
For the Six Months
Ended June 30,
2018(1)
2019(1)
2020(1)
2020(1)
2021(1)
(Unaudited)
(In US$ thousands, except for per share and per ADS data)
Consolidated Statements of Operations Data:
Revenues:
Advertising and marketing revenues:
Third parties
1,172,136 1,202,437 1,202,712 497,855 728,818
Alibaba(2)
117,696 97,772 188,597 72,542 109,918
SINA
79,148 112,974 48,353 27,624 30,931
Other related parties
130,200 117,028 46,493 17,985 22,682
Subtotal
1,499,180 1,530,211 1,486,155 616,006 892,349
Value-added services revenues
219,338 236,703 203,776 94,776 141,013
Total revenues
1,718,518 1,766,914 1,689,931 710,782 1,033,362
Costs and expenses:
Cost of revenues(3)
277,648 328,826 302,180 137,694 172,318
Sales and marketing(3)
527,424 465,339 455,619 211,220 298,368
Product development(3)
249,873 284,444 324,110 150,370 197,985
General and administrative(3)(4)
43,755 90,721 101,224 47,298 62,850
Goodwill and acquired intangibles impairment
10,554
Total costs and expenses
1,109,254 1,169,330 1,183,133 546,582 731,521
Income from operations
609,264 597,584 506,798 164,200 301,841
Income (loss) from equity method investments
57 (13,198) 10,434 3,388 13,605
Realized gain (loss) from investments
(287) 612 2,153 844 1,106
Fair value changes through earnings on investments, net(5)
40,074 207,438 35,115 117,517 (69,495)
Investment related impairment(6)
(24,074) (249,935) (211,985) (3,920) (66,625)
Interest income
57,970 85,386 85,829 45,609 40,068
Interest expense
(15,390) (29,896) (57,428) (22,363) (35,503)
Other income, net
1,228 4,406 4,997 1,356 6,808
Income before income tax expenses
668,842 602,397 375,913 306,631 191,805
Less: Provision of income taxes
96,222 109,564 61,316 56,627 61,855
Net income
572,620 492,833 314,597 250,004 129,950
Less: Net income (loss) attributable to non-controlling interests and redeemable non-controlling interests
797 (1,842) 1,233 (520) (898)
Net income attributable to Weibo’s shareholders
571,823 494,675 313,364 250,524 130,848
Shares used in computing net income per
share attributable to Weibo’s shareholders:
Basic
223,751 225,452 226,921 226,535 227,936
Diluted
232,683 226,412 227,637 227,129 229,429
 
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For the Year Ended December 31,
For the Six Months
Ended June 30,
2018(1)
2019(1)
2020(1)
2020(1)
2021(1)
(Unaudited)
(In US$ thousands, except for per share and per ADS data)
Income per ordinary share:
Basic
2.56 2.19 1.38 1.11 0.57
Diluted
2.52 2.18 1.38 1.10 0.57
Income per ADS(7):
Basic
2.56 2.19 1.38 1.11 0.57
Diluted
2.52 2.18 1.38 1.10 0.57
Notes:
(1)
On January 1, 2018, we adopted new revenue guidance ASC Topic 606, “Revenue from Contracts with Customers,” using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting method under Topic 605. Topic 606 re-quires the presentation of VAT recognized in revenues from “gross” to “net,” which results in equal decrease in revenues and cost of revenues, and recognition of revenues and expenses at fair value for advertising barter transactions.
(2)
We recorded US$117.7 million, US$97.8 million and US$152.0 million in advertising and marketing revenues from Alibaba during 2018, 2019 and 2020, respectively. We also recorded US$63.3 million and US$73.3 million in advertising and marketing revenues from Alibaba for the six months ended June 30, 2020 and 2021, respectively. Moreover, one of Alibaba’s subsidiaries began the business of advertising agency and contributed another US$36.6 million to our total revenues in 2020, and US$9.2 million and US$36.7 million to our total revenues for the six months ended June 30, 2020 and 2021, respectively.
(3)
Stock-based compensation was allocated in costs and expenses as follows:
For the Year Ended December 31,
For the Six Months
Ended June 30,
2018
2019
2020
2020
2021
(Unaudited)
(In US$ thousands)
Cost of revenues
3,522 5,251 5,384 2,502 3,240
Sales and marketing
6,837 9,828 9,983 4,263 5,549
Product development
21,187 28,628 33,093 14,452 18,213
General and administrative
9,465 17,582 18,645 8,971 9,219
Total
41,011 61,289 67,105 30,188 36,221
(4)
We adopted ASU 2016-13, “Financial Instruments — Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments” in the fiscal year of 2020. The guidance requires the measurement and recognition of expected credit loss-es for financial assets held at amortized cost that an entity does not expect to collect over the asset’s contractual life, considering past events, current conditions, and reasonable and supportable forecasts of future economic conditions.
(5)
We adopted ASU 2016-01 “Classification and Measurement of Financial Instruments” beginning the first quarter of fiscal year 2018. After the adoption of the new accounting update, we measure investments in equity securities, other than equity method investments, at fair value through earnings. For those investments without readily determinable fair values, we elected to record these investments at cost, less impairment, and plus or minus subsequent adjustments for observable price changes. Changes in the basis of these investments are reported in current earnings.
(6)
Investment related impairment includes impairment charges to equity investments, investment prepayments, and loans to and interest receivable from related parties.
(7)
Each ADS represents one Class A ordinary share.
 
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Selected Consolidated Balance Sheet Data
The following table presents a summary of our consolidated balance sheet data as of the date indicated.
As of December 31,
As of June 30,
2018
2019
2020
2021
(in US$ thousands)
Cash and cash equivalents
1,234,596 1,452,985 1,814,844 2,005,106
Short-term investments
591,269 951,235 1,682,048 930,822
Amount due from SINA
105,319 384,828 548,900 498,618
Long-term investments
694,586 1,027,459 1,179,466 1,123,258
Total assets(1)
3,274,682 4,804,186 6,335,117 6,702,725
Convertible debt
884,123 888,266 892,399 894,470
Unsecured senior notes
793,985 1,536,112 1,537,264
Total liabilities(1)
1,526,544 2,522,367 3,448,787 3,595,107
Net current assets
1,839,254 2,835,323 3,876,189 3,560,382
Ordinary shares
57 57 57 57
Additional paid-in capital
1,071,836 1,133,913 1,201,622 1,239,461
Retained earnings
723,181 1,217,856 1,531,220 1,662,068
Non-controlling interests
2,679 (1,448) 16,191 28,221
Total shareholders’ equity
1,748,138 2,281,819 2,828,616 3,038,259
Note:
(1)
We adopted the new leasing guidance (ASU 2016-2) from January 1, 2019, which requires that a lessee recognize the assets and liabilities that arise from operating leases. We recognized a right-of-use asset and a liability relating to lease payments (the Lease Liability) in the statements of financial position for lease contracts having terms beyond 12 months period.
Selected Consolidated Cash Flow Data
The following table sets forth a summary of our cash flows for the periods indicated.
For the Year Ended December 31,
For the Six Months
Ended June 30,
2018
2019
2020
2020
2021
(Unaudited)
(In US$ thousands)
Net cash provided by operating activities
488,007 631,653 741,646 185,264 338,357
Net cash used in investing activities
(254,032) (1,201,358) (1,214,315) (154,782) (162,508)
Net cash provided by (used in) financing activities
(1,415) 791,869 741,963 1,625 226
Effect of exchange rate changes on cash and cash equivalents
1,083 (3,775) 92,565 (12,841) 14,187
Net increase in cash and cash equivalents
233,643 218,389 361,859 19,266 190,262
Cash and cash equivalents at the beginning of the year/period
1,000,953 1,234,596 1,452,985 1,452,985 1,814,844
Cash and cash equivalents at the end of
the year/period
1,234,596 1,452,985 1,814,844 1,472,251 2,005,106
Impact of COVID-19 Pandemic on Our Operations
The COVID-19 pandemic has had, and, together with any subsequent outbreaks driven by new variants of COVID-19, may continue to have, a significant impact on our operations and financial results. The outbreak of COVID-19 has caused our advertising and marketing customers to reduce their advertising budgets, which has affected our advertising revenues and financial performance in the year of 2020,
 
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particularly in its first half. The COVID-19 pandemic has caused negative impact to our total revenues, slower collection of accounts receivables, and additional allowance for credit losses. Our advertising business has been gradually recovering, underpinned by improved advertiser sentiment, following the effective control of the domestic outbreaks and work resumption. In China, business activities have largely resumed, governmental emergency measures have been significantly relaxed, and the general economy is gradually recovering. Recently, there has been an increasing number of COVID-19 cases, including the COVID-19 Delta variant cases, in multiple cities in China. The Chinese local authorities have reinstated certain measures to keep COVID-19 in check, including travel restrictions and stay-at-home orders, and we may have to adjust various aspects of our operations. In addition, the highly-transmissible Delta variant of COVID-19 has caused authorities in various countries to reimpose restrictions such as mask mandates, curfews and prohibitions on large gatherings. There remain significant uncertainties surrounding COVID-19, including the existing and new variants of COVID-19, and its further development as a global pandemic, including the effectiveness of vaccine programs against existing and any new variants of COVID-19, and their impacts on our customers’ advertising budget and spending more broadly. The extent of any business disruption and the related impact on our financial results and outlook cannot be reasonably estimated at this time. See also “Item 3.D. Key Information — Risk Factors — Risks Relating to Our Business — We face risks related to health epidemics and other outbreaks, such as the outbreak of COVID-19, as well as natural disasters, which could significantly disrupt our operations and adversely affect our business, financial condition or results of operation.” in our 2020 Form 20-F.
 
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Financial Information Related to the VIEs and Parent
Set forth below are the condensed consolidating schedule showing the financial position, results of operations and cash flows for the parent, subsidiaries, and the VIEs, eliminating adjustments and consolidated totals (in thousands of US$) as of and for the years ended December 31, 2018, 2019 and 2020.
As of December 31, 2018
As of December 31, 2019
As of December 31, 2020
Parent
Subsidiaries
VIEs
and VIEs’
subsidiaries
Eliminating
adjustments
Consolidated
totals
Parent
Subsidiaries
VIEs
and VIEs’
subsidiaries
Eliminating
adjustments
Consolidated
totals
Parent
Subsidiaries
VIEs
and VIEs’
subsidiaries
Eliminating
adjustments
Consolidated
totals
Condensed Consolidating
Schedule of Financial
Position
Cash, cash equivalents and short-term investments
856,732 913,627 55,506 1,825,865 1,440,111 864,644 99,465 2,404,220 1,793,289 1,258,393 445,210 3,496,892
Accounts receivable
2,965 366,128 369,093 1,539 420,686 422,225 60,988 431,022 492,010
Prepaid expenses and other current assets
184 47,427 121,210 168,821 41,483 282,059 101,363 424,905 41,261 199,843 55,653 296,757
Amount due from Group
companies(1)
423,360 440,563 (863,923) 596,748 632,900 (1,229,648) 732,216 968,138 (1,700,354)
Amount due from
SINA
73,532 31,787 105,319 268,293 116,535 384,828 212,604 305,154 31,142 548,900
Investment in subsidiaries
and VIEs(2)
1,355,191 (1,355,191) 1,906,629 (1,906,629) 2,467,097 (2,467,097)
Property and equipment,
net
45,174 449 45,623 46,486 243 46,729 59,940 692 60,632
Operating lease assets
9,044 686 9,730 5,393 1,783 7,176
Intangible assets, net
21,103 21,103 17,524 17,524 146,976 146,976
Goodwill
29,346 29,346 28,989 28,989 61,712 61,712
Long-term investments
418,767 275,819 694,586 647,039 380,420 1,027,459 784,721 394,745 1,179,466
Deferred tax assets
6,130 5,778 11,908 5,852 10,608 16,460 11,628 15,392 27,020
Others
1,000 554 1,464 3,018 1,000 11,492 8,625 21,117 1,000 16,353 223 17,576
Total assets
2,636,467 1,948,739 908,590 (2,219,114) 3,274,682 3,985,971 2,769,348 1,185,144 (3,136,277) 4,804,186 5,247,467 3,670,551 1,584,550 (4,167,451) 6,335,117
Accounts payable
43,849 79,881 123,730 39,830 86,417 126,247 66,173 83,336 149,509
Accrued and other liabilities
6,394 129,855 181,188 317,437 20,124 186,184 254,564 460,872 6,145 209,056 341,552 556,753
Deferred revenues
491 33,972 65,531 99,994 329 41,921 66,533 108,783 386 57,452 85,846 143,684
 
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As of December 31, 2018
As of December 31, 2019
As of December 31, 2020
Parent
Subsidiaries
VIEs
and VIEs’
subsidiaries
Eliminating
adjustments
Consolidated
totals
Parent
Subsidiaries
VIEs
and VIEs’
subsidiaries
Eliminating
adjustments
Consolidated
totals
Parent
Subsidiaries
VIEs
and VIEs’
subsidiaries
Eliminating
adjustments
Consolidated
totals
Income taxes payable
67,513 21,170 88,683 71,275 28,970 100,245 76,427 26,417 102,844
Amount due to Group companies(1)
423,360 440,563 (863,923) 596,748 632,900 (1,229,648) 732,216 968,138 (1,700,354)
Operating lease
liability
9,411 586 9,997 5,381 1,704 7,085
Convertible debt
884,123 884,123 888,266 888,266 892,399 892,399
Unsecured senior notes
793,985 793,985 1,536,112 1,536,112
Deferred tax liability
702 11,875 12,577 22,519 11,453 33,972 25,881 32,418 58,299
Other non-current liabilities
2,102 2,102
Total liabilities
891,008 699,251 800,208 (863,923) 1,526,544 1,702,704 967,888 1,081,423 (1,229,648) 2,522,367 2,435,042 1,172,586 1,541,513 (1,700,354) 3,448,787
Redeemable
non-controlling interests
57,714
57,714
Total shareholders’ equity(2)
1,745,459 1,249,488 108,382 (1,355,191) 1,748,138 2,283,267 1,801,460 103,721 (1,906,629) 2,281,819 2,812,425 2,497,965 (14,677) (2,467,097) 2,828,616
Total liabilities, redeemable non-controlling
interests and shareholders’ equity
2,636,467 1,948,739 908,590 (2,219,114) 3,274,682 3,985,971 2,769,348 1,185,144 (3,136,277) 4,804,186 5,247,467 3,670,551 1,584,550 (4,167,451) 6,335,117
 
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For the year ended December 31, 2018
For the year ended December 31, 2019
For the year ended December 31, 2020
Parent
Subsidiaries
VIEs
and VIEs’
subsidiaries
Eliminating
adjustments
Consolidated
totals
Parent
Subsidiaries
VIEs
and VIEs’
subsidiaries
Eliminating
adjustments
Consolidated
totals
Parent
Subsidiaries
VIEs
and VIEs’
subsidiaries
Eliminating
adjustments
Consolidated
totals
Condensed Consolidating Schedule of Results of Operations
Total revenues(3)
1,159 1,143,609 1,416,367 (842,617) 1,718,518 791 1,128,099 1,472,867 (834,843) 1,766,914 314 1,138,244 1,319,080 (767,707) 1,689,931
Total cost and
expenses(3)
(43,228) (534,831) (1,373,812) 842,617 (1,109,254) (62,905) (489,800) (1,451,468) 834,843 (1,169,330) (68,725) (581,700) (1,300,415) 767,707 (1,183,133)
Equity in gain of subsidiaries/
VIEs(2)
608,204 (608,204) 554,251 (554,251) 411,828 (411,828)
Income(loss) from non-operations
5,688 3,478 50,412 59,578 2,538 (8,095) 10,370 4,813 (30,053) 40,717 (141,549) (130,885)
Income(loss) before income tax expenses
571,823 612,256 92,967 (608,204) 668,842 494,675 630,204 31,769 (554,251) 602,397 313,364 597,261 (122,884) (411,828) 375,913
Less: Provision of income taxes
60,518 35,704 96,222 85,827 23,737 109,564 56,307