Luckin Coffee Inc.
| Company Name | Luckin Coffee Inc. |
| Stock Symbol | LK |
| Class Period | May 17, 2019 to April 06, 2020 |
| Lead Plaintiff Motion Deadline | April 13, 2020 |
On January 31, 2020, Muddy Waters Research (“Muddy Waters”) published an anonymous report alleging that Luckin “had evolved into a fraud by fabricating financial and operating numbers starting in [the] 3rd quarter 2019.” Among other allegations, Muddy Waters claims that the “[n]umber of items per store per day was inflated by at least 69% in 2019 3Q and 88% in 2019 4Q” and that “Luckin inflated its net selling price per item by at least RMB 1.23 or 12.3%.”
On this news, Luckin’s share price fell $3.91, or nearly 11%, to close at $32.49 per share on January 31, 2020, thereby injuring investors.
Then, on April 2, 2020, before the market opened, Luckin disclosed that "beginning in the second quarter of 2019, Mr. Jian Liu, the chief operating officer and a director of the Company, and several employees reporting to him, had engaged in certain misconduct, including fabricating certain transactions." The Company further revealed that "the aggregate sales amount associated with the fabricated transactions from the second quarter of 2019 to the fourth quarter of 2019 amount to around RMB2.2 billion." As a result, the COO was suspended, and Luckin stated that previously issued financial statements should no longer be relied upon.
On this news, the Company's share price fell $19.80, or over 75%, to close at $6.40 per share on April 2, 2020, thereby injuring investors further.
Then, on April 6, 2020, Goldman Sachs & Co. LLC announced that an entity controlled by Luckin’s co-founder had defaulted on a $518 million margin loan facility and a group of lenders was putting 76.3 million of the Company’s ADS—pledged as collateral for the loan by Luckin’s co-founders—up for sale.
On this news, the Company’s share price fell $0.99, or over 18%, to close at $4.39 per share on April 6, 2020.
On April 7, 2020, NASDAQ halted trading of Luckin’s securities for “news pending” at a last sale price of $4.39. On April 9, 2020, NASDAQ changed the trading halt status to “additional information requested” from the Company.
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