That strategy has been successful in winning over investors.The news is likely to put at least a temporary freeze on new U.S. listings by Chinese companies, according to four investment bankers who asked not to be identified because they aren’t authorized to speak to media. "Luckin shows exactly why we need short sellers in the market. 近期，各类媒体平台上出现“luckin coffee瑞幸咖啡加盟”等虚假信息，以此进行非法招商加盟活动。 对此，我司严正声明：“luckin coffee”、“瑞幸咖啡”均为我司注册商标；我司官方微博账户名称为“luckin coffee瑞幸咖啡”，微信公众号平台为“luckin coffee瑞幸咖啡”。
Shares peaked in January at $51.38 but tumbled as the coronavirus outbreak spread in China. Chinese coffee chain Luckin Coffee was listed in the U.S. just last year. Excluding Thursday's plunge, the stock was up 54% since its IPO.Got a confidential news tip? One of the bankers said U.S. investor appetite for Chinese shares already had waned amid a string of disappointing deals and heightened geopolitical tensions between Washington and Beijing.Louis Tse, Hong Kong-based managing director at VC Asset Management Ltd., disagreed, saying all IPOs have to follow the same procedures and meet the same regulatory requirements.“I don’t think this will tarnish the names of incoming companies in Nasdaq,” he said. Luckin Coffee Inc. is opening stores at a breakneck pace in China and pledging internal company change as it tries to move beyond an escalating scandal involving $310 million in … Coffee consumption is only in its initial stages in China, and Luckin Coffee was trying to overtake Starbucks by opening more stores in two years than the industry giant has in two decades. The organizers had a hunch that Luckin Coffee, China’s fast-growing challenger to Starbucks and a company traded in the U.S. stock market, was falsifying financial statements to exaggerate its sales. “It will inevitably affect the investors’ confidence and market momentum on other U.S.-listed China stocks,” said Steven Leung, executive director at UOB Kay Hian in Hong Kong.
It is aggressively offering huge discounts. Luckin pulled in Chinese consumers by offering generous discounts.Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.“Certain costs and expenses were also substantially inflated by fabricated transactions during this period,” Luckin said, adding that the board hasn’t verified the fabricated sales figures. Just last year, one of China’s largest listed drug makers said it overstated cash holdings by more than $4.3 billion.Those concerns come on top of a general flight from risk because of the coronavirus pandemic, which has caused IPO volumes globally to plunge in recent weeks.People wearing protective masks gather outside a Luckin Coffee Inc. outlet in Shanghai, on April 3.“After the Luckin incident, investors will be more careful when investing in Chinese companies that have a short founding history and rely on huge leverage to expand,” said Jackson Wong, Hong Kong-based asset management director for Amber Hill Capital Ltd.The coffee chain, founded in 2017, operated about 4,500 stores by the end of 2019 in China. On Tuesday, … The stock hit an all-time low of $4.90 per share Thursday morning. We believed this report was credible when we read it, and that's why we took a position," Muddy Waters founder Carson Block said in a statement to CNBC. Luckin Coffee has also challenged the dominance of Starbucks in terms of price. Luckin Coffee denied the allegations.Thursday’s share decline erased what had been a 54% gain since the company went public last year.The revelations revived doubts about financial reporting that have for years dogged Chinese stocks listed in the U.S. and Hong Kong, two exchanges frequently picked by company founders to raise new funds. Chairman Lu Zhengyao and Chief Executive Officer Qian Zhiya employed a strategy they used with CAR Inc. more than a decade ago: burning money from investors to quickly grab market share from rivals.