Full Answer
Why is the LK share price going up in 2020?
The group possibly initially chose the U.S. due to easier listing requirements for ADRs. The LK share price hit an all-time high of $50.38 on Jan. 17, 2020. But the story has changed since then.
Is Luckin industries (LK) a growth stock?
For LK stock, this is a crippling deception. Honestly, it doesn’t matter that both revenue and costs were inflated. The point is, Luckin lied about the viability of its growth narrative. Isn’t LK a growth stock? At the top, I mentioned that the controversy surround LK stock couldn’t have come at a worse time for the underlying organization.
Is LK stock the Starbucks of China?
Since its early days, LK stock has been touted as the Starbucks (NASDAQ: SBUX) of China. In May 2019, LK stock went public in the U.S. as an American Depositary Receipt ( ADR) at an opening price of $25.
What happened to Luckin Coffee's stock?
The stock resumed trading on May 20, ending a trading halt that Nasdaq had enacted on Luckin's shares on April 7 after news of the accounting scandal broke. Luckin's stock price went on to plunge further once more investors had the opportunity to sell their shares. Luckin Coffee's stock plunged on Friday. Image source: Getty Images.
Why is Luckin Coffee stock going down?
Luckin dramatically inflated its revenues using clever accounting maneuvers. In turn, it used that overstated size to raise capital and bolster its international profile. Since investigators revealed the fraud, Luckin's shares collapsed, much of the management team left, and the Nasdaq delisted Luckin Coffee stock.
Will Luckin Coffee be listed again?
Luckin Coffee is planning a return to the US stock market, according to a Financial Times report. The Chinese coffee chain was delisted in 2020 after it committed $300 million in accounting fraud.
What happens to my Luckin Coffee stock?
As of 7/13/2020, Luckin Coffee (LK) has been delisted from the Nasdaq stock exchange. When a stock exchange delists a company, that stock stops being available to buy or sell on that exchange. As a result, Cash App Investing will no longer support any trades for the company.
Should I sell my Luckin Coffee stock?
Assuming the 90 days horizon and your highly speculative risk level, our recommendation regarding Luckin Coffee is 'Hold'. Macroaxis provides Luckin Coffee buy-hold-or-sell recommendation only in the context of selected investment horizon and investor attitude towards risk assumed by holding LKNCY positions.
Is LKNCY a buy or sell?
Today LKNCY ranks #12901 as sell candidate.
Is Luckin Coffee undervalued?
Luckin Coffee secures a last-minute Real Value of $18.74 per share. The latest price of the firm is $12.19. At this time, the firm appears to be undervalued....USD 12.19 0.47 4.01%LowEstimated ValueHigh3.6312.1320.63
Is Luckin still in business?
Luckin now operates more than 6,000 locations in China and says it has more than 16 million customers a month, up from 9.7 million customers a month at the end of 2020.
The Case for Luckin Stock
It seems almost silly to say that Luckin stock is cheap on paper. After all, it was also “on paper” that the company reported an estimated 2.2 billion RMB more in revenue than it actually generated. Investors would be forgiven for not trusting any of Luckin’s numbers.
A Matter of Trust
Put another way, the case for LK stock was based on growth. The case for LKNCY stock would be based on value.
LK Stock Has No Redeeming Value
Although it might seem strange to compare a publicly traded company to a baseball team, we may see a similar debate play out on Wall Street.
About Luckin Time for a Reckoning
At the top, I mentioned that the controversy surround LK stock couldn’t have come at a worse time for the underlying organization. Right now, China is public enemy number one.
LK Stock and American Depositary Receipts (ADRs)
The Xiamen-based company started operations in Oct. 2017. Since its early days, LK stock has been touted as the Starbucks (NASDAQ: SBUX) of China.
Fraud Allegations
In late January, short-seller Muddy Waters released a report accusing Luckin Management of fraud. It also said the group had a “ fundamentally broken business .”
Luckin Stores Are Still Open in China
Indeed on April 21, the SEC put a public statement that warned investors on various risks due to investing in companies from emerging countries. It said,
The Bottom Line on LK Stock
In hindsight, investors who bought LK stock since its IPO may now be wondering whether the group completed the listing rather early in the company’s history. Instead should the business have focused on building market share and raising cash through other market mechanisms?
What happened
Shares of beleaguered Chinese coffee stock Luckin Coffee ( LKNC.Y 0.00% ) are slumping in early trading Wednesday -- and for a change, this time it's not necessarily Luckin's own fault.
So what
On the China-India border, a clash between Chinese and Indian army units resulted in the deaths of "at least 20 Indian soldiers," reports the BBC.
Now what
Viewed in the context of America's 2.1 million reported infections, that may not sound like much, but it's apparently enough to have thrown the Chinese government into panic mode -- and to disconcert investors as well -- for good reason, I might add, when you consider the draconian restrictions on commerce China imposed to contain the COVID-19 outbreak in Wuhan..
Premium Investing Services
Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.
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.
When did Luckin's stock resume trading?
Luckin requested a hearing, which is expected to occur in approximately 30 to 45 days. The stock resumed trading on May 20, ending a trading halt that Nasdaq had enacted on Luckin's shares on April 7 after news of the accounting scandal broke.
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."