Luckin Coffee Admits Fabricated Sales Figure, Stock Gets Punished
Posted on 04/03/2020
Troubled Chinese coffee chain company
Luckin Coffee Inc., which competes against Starbucks Corporation,
coughed up to admitting it fabricated sales totaling 2.2 billion yuan (US$ 310 million) over the last three quarters of 2019.
The fabricated financial figure
is equal to more than 40% of Luckin Coffee’s revenue in 2019.
This public disclosure ：
was the result of an internal company probe.
Luckin Coffee suspended its COO Jian Liu and employees reporting to him.
Once the probe findings were made public,
shares of Luckin Coffee closed down to US$ 6.40 per shares, wiping out previous market capitalization at one point of US$ 6.6 billion down to US$ 1.6 billion.
Luckin Coffee was backed by sovereign funds,
GIC Private Limited and
the Qatar Investment Authority (QIA),
before Luckin Coffee’s initial public offering. At the end of February 2020,
GIC held over 5% of Class A ordinary shares in Luckin Coffee, but substantially sold off its position before Luckin Coffee confessed.
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Luckin Coffee stock tanks 80% after discovery that COO fabricated about $310 million in sales (LK) | Markets Insider