Luckin Coffee's stock crashed in April after the company disclosed that it was investigating its chief operating officer for allegedly inflating sales by hundreds of millions of dollars. Several weeks later, Luckin fired COO Jian Liu and CEO Jenny Zhiya Qian due to their alleged roles in the scandal.
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Feb 01, 2022 · Luckin Coffee ( OTCPK:LKNCY) fell 2.77% as investors continue to weigh the company's chance to resurrect itself. Volume on Luckin was 2.1M shares today. There have been some back and forth reports ...
Why is Luckin Coffee dropping?
Why is Lkncy stock down today?
Today, reports that Chinese tech hub Shenzhen has been locked down by the Chinese government, following the worst outbreak of Covid-19 in two years in the country, has investors in all Chinese stocks feeling highly uncertain.Mar 14, 2022
Can Luckin Coffee recover?
Is luckin coffee any good?
Is Lkncy a buy?
Can Luckin Coffee come back to Nasdaq?
Things are going from bad to worse for the beleaguered Chinese coffeehouse chain
Joe honed his investing skills as an analyst for Stock Advisor, Supernova, and Fool One. He battle-tested his investment philosophy and strategies as portfolio manager of Tier 1, a market-crushing Motley Fool real-money portfolio that delivered 24.58% annualized returns during its existence.
What happened
Shares of Luckin Coffee ( OTC:LKNC.Y) fell nearly 13% on Monday following reports that its chairman and largest shareholder could face criminal charges.
So what
Chairman Lu Zhengyao (who also goes by the name Charles Lu) will reportedly face criminal charges in China after authorities found emails that he allegedly sent to Luckin employees instructing them to commit fraud, according to Chinese news service Caixin.
Now what
If Zhengyao does in fact face criminal charges, he likely won't be able to help oversee Luckin's turnaround efforts. At that point, Luckin would be without three of its most senior leaders -- a void that comes at a terrible time for the struggling company.
The beleaguered coffee chain received another exchange warning
Joe honed his investing skills as an analyst for Stock Advisor, Supernova, and Fool One. He battle-tested his investment philosophy and strategies as portfolio manager of Tier 1, a market-crushing Motley Fool real-money portfolio that delivered 24.58% annualized returns during its existence.
What happened
Shares of Luckin Coffee ( OTC:LKNC.Y) fell more than 12% on Tuesday after the Chinese coffeehouse company disclosed that it received another delisting notice from Nasdaq .
So what
Luckin Coffee said that it received a notice from the Nasdaq Stock Market on June 17, which warned that its failure to file its annual report would serve as an additional reason for delisting its shares.
Now what
In addition to the potential delisting of its shares from the Nasdaq exchange, forced asset sales could put further pressure on the beleaguered coffee chain's share price. Lenders recently won a court order that will help them attempt to recover more than $300 million of outstanding debt from Luckin Chairman Lu Zhengyao.
The road to recovery may be harder than you think
Joe honed his investing skills as an analyst for Stock Advisor, Supernova, and Fool One. He battle-tested his investment philosophy and strategies as portfolio manager of Tier 1, a market-crushing Motley Fool real-money portfolio that delivered 24.58% annualized returns during its existence.
What happened
Shares of Luckin Coffee ( OTC:LKNC.Y) declined on Thursday after a key rival warned of heavy losses in the coming quarters. As of 11:33 a.m. EDT today, Luckin's stock was down more than 15%.
So what
It's been a rough few months for Luckin and its long-term investors. After the Chinese coffeehouse chain disclosed on April 2 that it had fabricated as much as $310 million in sales from the second quarter of 2019 to the fourth quarter, its stock plummeted.
Now what
Although Starbucks said that it expects its comps to "substantially recover" by the end of the fourth quarter, Luckin is in a far weaker financial position and may not be as able to ride out the coronavirus storm.
Why did Luckin Coffee stock crash?
Luckin Coffee's stock crashed in April after the company disclosed that it was investigating its chief operating officer for allegedly inflating sales by hundreds of millions of dollars. Several weeks later, Luckin fired COO Jian Liu and CEO Jenny Zhiya Qian due to their alleged roles in the scandal.
Is Luckin Coffee going to wipe out?
Some investors, such as Quo Vadis Capital president John Zolidis, believe that the end result of the company's accounting scandal could be a "complete wipe-out for equity holders."
Forced selling could damage this stock's price
I like things that go "boom." Sonic or otherwise, that means I tend to gravitate towards defense and aerospace stocks. But to tell the truth, over the course of a dozen years writing for The Motley Fool, I have covered -- and continue to cover -- everything from retailers to consumer goods stocks, and from tech to banks to insurers as well.
What happened
Shares of beleaguered Chinese coffeehouse chain Luckin Coffee ( OTC:LKNC.Y) had tumbled another 16.8% through 11:35 a.m. EDT on Monday.
So what
In total, the Journal reports, Luckin's chairman owes $324 million to the banks, which became due when he defaulted on his margin loan. To collect part of the money owed, courts have ordered that 131.25 million Luckin shares in China, worth about $63 million, be transferred to accounting firm KPMG for liquidation.
Now what
The sale of all these shares en masse to repay the banks' loans is likely to depress the value of the stock as a buyers' market forms for Luckin stock. Investors selling Luckin stock today are simply trying to beat the rush for the exits.