Trading in Luckin Coffee Inc. (LK) is scheduled to resume on Wednesday, May 20, 2020, at 7AM ET, Nasdaq has announced.
It is now well over a month since the Chinese coffee chain’s stock was halted on April 7, 2020 at 9:15 ET.
At the time Nasdaq cited two reasons for delisting: (i) public interest concerns due to fabricated transactions disclosed by Luckin in a Form 6-K on April 2; and (ii) the company’s failure to publicly disclose material information.
Indeed, shares plunged 80% on April 2 following allegations that Chief Operating Officer Jian Liu, and several employees, fabricated 2.2B yuan ($310 million) in transactions from 2Q-4Q19. Subsequently a special committee was formed to oversee an internal investigation, and both Jian Liu and CEO Jenny Zhiya Qian were fired.
Six employees who “were involved in or had the knowledge of the fabricated transactions” were also suspended or placed on leave.
Unsurprisingly, KeyBanc’s Eric Gonzalez downgraded the Starbucks rival to Hold last month and removed his $56 price target, explaining: “it will take several years for management to repair its credibility.”
Meanwhile Needham analyst Vincent Yu wrote: “all previous financial numbers can no longer be relied upon. Given the ongoing audit investigation process and reduction in visibility into Luckin’s financials, we are suspending our rating.”
In just over two years, Luckin has expanded to over 4,500 stores across China. (See LK stock analysis on TipRanks).
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