top of page
  • Writer's pictureFaron

China's Luckin Coffee Shares plummet 80% after investigation finds COO fabricated sales

Luckin Coffee disclosed that an internal investigation has found that its chief operating officer fabricated 2019 sales by about 2.2 billion yuan ($310 million).


Shares cratered more than 80% in premarket trading after the release of the regulatory filing. Recently shares were down nearly 72%, wiping out nearly $5 billion from its market value.

The investigation found that Jian Liu, Luckin's chief operating officer, and several employees who reported to him, had engaged in misconduct, including fabricating sales. Liu and the employees implicated in the misconduct have been suspended, and Luckin said it will take legal action against those responsible.


Jian couldn't be located for comment.


The 2½-year-old company, which had hoped to overtake Starbucks as China's top coffee chain, said investors should not rely on its prior financial statements and earnings releases for the nine months ended Sept. 30. The coffee chain previously said net sales for the first nine months of 2019 were 2.9 billion yuan ($413 million).




Luckin said the internal investigation is at a preliminary stage and its estimate of the fabricated sales has not been verified by its independent auditor. The company's special committee has retained Kirkland & Ellis as its independent outside counsel and FTI Consulting as an independent forensic accounting expert.


Muddy Waters Research said in January that it bet against the stock in light of what it described as fraud and a "fundamentally broken business."




Luckin responded by calling the short seller's report "misleading" and "false."


"Luckin shows exactly why we need short sellers in the market. We believed this report was credible when we read it, and that's why we took a position," Muddy Waters founder Carson Block said in a statement to CNBC. "This is again a wake-up call for U.S. policymakers, regulators, and investors about the extreme fraud risk China-based companies pose to our markets."




The Chinese company raised $561 million in its initial public offering after pricing shares at $17. The stock began trading publicly on the Nasdaq in May, surging 18% in its debut. Shares peaked in January at $51.38 but tumbled as the coronavirus outbreak spread in China. The stock hit an all-time low of $4.90 per share Thursday morning. Excluding Thursday's plunge, the stock was up 54% since its IPO.




Luckin has tried to build a customer base with smaller locations formatted for convenience and offering steep discounts. In January, the company said that it had more than 4,500 locations in China, several hundred more than Starbucks. Starbucks has responded to the competitive threat by opening cafes in China designed for quicker pick-up and delivery and less seating.

3 views0 comments

Recent Posts

See All

跟着政府买,是不是包赚?/韭哥

跟着政府买股票就包赚吗? 我当年(2012)一进货就买马银行,大众银行的时候,是这样想的。 大蓝筹有赚头 但是10多年后的今天,看回去,也就只有马银行,联昌国际,大众银行等大蓝筹有赚到点,剩下的很多,我买过的,没买过的,都亏惨。股民当韭菜,政府当韭王。 亏的比较有代表性的,我第一个想起的是马航,当年财政部7、8块买,很多阿北也跟着买,结果都变成了韭菜。这是典型经营不善的漏水屋,然后2014再来MH

马股曾发生过的腥风血雨……

1)电脑纸 电脑纸(CFM,8044,主板工业产品服务组)股价去年11月中旬开始攀涨,从1令吉14仙一度飙升至2令吉92仙,涨幅超过150%,但今年2月24日开始突然狂泻不止,跌回1令吉50仙水平线下,劲挫约48%。 较后,该股更开启了长达10个交易日的跌风,股价两周遭“砍半”,同时还跌停板,不寻常波动遭交易所发出UMA,惟电脑纸回应不知情。 随着股价跌风四起,去年8月受委独立兼非执行副主席拿督斯

蔡兆源 | 钱藏在税务天堂就没事吗?

国内政治风云再起,《巴拿马泄密事件》再次成为焦点。全球不少政商名流的名字都出现在巴拿马—间著名的信托秘书服务公司的客户名单中,震撼全球。之前,此泄密事件甚至导致某国的总理下台。某些富豪在“税务天堂”成立岸外信托(Trust)或基金会(Foundation)来规划其遗产与企业传承,以加强其保密度。但也有些纳税人,为了避税(Tax Avoidance)或是逃税(Tax Evasion),将钱藏在“税务

Comments


bottom of page