The US Securities and Exchange Commission has placed Chinese social media platform Weibo among a group of stocks facing delisting, extending the roster of Chinese companies flagged for failing to meet financial disclosure requirements.
Nasdaq-listed Weibo becomes the sixth Chinese corporation cited by the SEC for possible delisting under a 2020 law on financial disclosures, according to Wednesday’s announcement. Yum China Holdings, which operates KFC chicken restaurants in China, was among the five others named earlier this month.
Weibo will “continue to monitor market developments and evaluate all strategic options,” the company said on Thursday.
Weibo is a miniblog app that has been called China’s answer to Twitter. It is one of the biggest social media platforms on the planet, with 573 million monthly active users. The company conducted a secondary listing, in Hong Kong, in December.
The Holding Foreign Companies Accountable Act requires certain foreign corporations to establish that they are not owned or controlled by a foreign government, and boots them off domestic exchanges if they fail to provide relevant audit reports. However, those on the Chinese side have refused to turn over the necessary information to American inspectors, citing data security concerns.
“The two sides are working on a concrete cooperation plan,” Vice Premier Liu He said during a March 16 meeting of the State Council, China’s cabinet. But talks between US and Chinese authorities toward a breakthrough have been protracted.
The fallout from the clampdown has been steep. The Nasdaq Golden Dragon China Index, which reflects the movement of American depositary receipts of Chinese enterprises, has dropped by more than 60% from its all-time high in February 2021.