In a new SEC filing Luckin Coffee, the China-based and American-listed coffee chain that has become embroiled in scandal announced that the Nasdaq really wants it gone.
According to the Luckin Coffee, the Nasdaq exchange where it is listed sent “an additional written notice indicating that it’s failure to file Form 20-F for the period ended December 31, 2019, serves as an additional basis for delisting it’s securities from the Nasdaq,” adding that this new notice “is in addition to the two bases cited in the written notice issued” that the company had disclosed in mid-May.
The Luckin is a story of shocking growth followed by an Icarus-like descent back to Earth. The Chinese firm announced its intention to go public in April of 2019, which led to an upsized IPO raising $651 million, and an initially warm reception from Wall Street.
Things eventually went south. After one year of its IPO filing, Luckin disclosed that it may have inflated revenues and expenses by hundreds of millions of dollars. As TechCrunch reported, the “alleged fraud is believed to have begun in the second quarter of 2019,” around the time that it was going public.
After its value dropped by nearly 80% in the aftermath of the fraud, Luckin saw some users rush to use its service, worried that some discounts and coupons could become worthless. But the company did find something to scapegoat when it came time to file its results.
In what continues to be among the more amusing examples of using a COVID-19 as an excuse for internal challenges, Luckin’s SEC filing also noted that “the Company has not been able to file the Annual Report due to the impact of the delayed financial statement preparation process caused by COVID-19 and the pendency of the previously disclosed internal investigation.”
The story continues though. The chairman of the company, Lu Zhengyao, is pushing for board changes according to leading Chinese business publication Caixin that would hobble the company’s investigation into its accounting practices. Because there is no fraud if you don’t account for it. Just ask Wirecard.