Chinese coffee company and coffeehouse chain Luckin Coffee is back in the news after flying under the radar for the last two years. But don’t worry, it’s not for a bad reason this time. 👍
For those unfamiliar with the company, it was best known for coming public on the Nasdaq stock exchange in May 2019 and being rocked by an accounting scandal shortly after. In early 2020, investigative investment firm MuddyWatersResearch published a report that indicated the company had heavily inflated its sales numbers. 🕵️♂️
That investigation caused more investors to look into the company as the COVID-19 pandemic began, forcing Luckin to shut down most of its stores. Ultimately, an internal investigation found that former COO Jian Liu had committed and hidden fraud, and the stock’s decline caused co-founder Charles Lu to default on a margin loan collateralized by Luckin shares.
As the issues mounted, the company was fined by the Securities and Exchange Commission (SEC) and Chinese regulators, leading to a Chapter 15 bankruptcy filing in February 2021. That allowed it to retrench its operations, settle existing claims, and reach a global settlement of $187.5 million with its angry shareholders. 📝
Since then, CEO Jinyi Guo has been leading the turnaround efforts, with the company reestablishing itself in China and now looking to expand into other countries. Additionally, it’s looking to regain its listing on the Nasdaq, currently trading in the “over-the-counter” (OTC) market in the U.S.
Anyway, as for why the company was trending today. Well, it was coffee sales for a change. ☕
The company recently launched a new partnership with Kweichow Moutai to bring an alcohol-infused latte to its stores. The product set a record on its launch day, selling more than 5.42 million cups. That topped previous hits such as its cheese latte and coconut cloud latte, which sold 1.31 million and 660,000 cups, respectively.
$LKNCY shares rose more than 5% today as the company continues its steady ascent. 📈