Luckin Receives Another Nasdaq Drop Notice, Shares Fall 18%

Reinout Schakel, chief financial officer of Luckin Coffee Inc., pauses as he speaks during the company’s initial public offering (IPO) at the Nasdaq MarketSite in New York, USA. USA, Friday May 17, 2019.

Victor J. Blue | Bloomberg | fake pictures

Luckin Coffee revealed on Tuesday that it received a listing cancellation notice from Nasdaq last week after it was unable to file its annual report, causing shares of the Chinese coffee chain to drop approximately 18%.

This is the second notice on the US stock exchange. USA The previous one aired in May, after the company announced an investigation that a top executive manufactured and overestimated up to 2.2 billion yuan ($ 311.5 million) in 2019 sales.

The latest reason cited by Nasdaq adds to the two bases disclosed last month: public concerns raised by the fabricated transactions and the company’s inability to disclose material information.

The Chinese company, which competes with the American coffee shop Starbucks, said the failure to submit its annual report was due to delays caused by the Covid-19 pandemic and is awaiting the result of the internal investigation.

The company will hold an extraordinary general meeting next month to vote on whether to remove several directors, including President Charles Zhengyao Lu.

Luckin’s shares have plummeted more than 85% since April since the internal investigation was announced and has resulted in a default on a loan guaranteed by the company pledging millions of shares.

The shares fell to $ 2.6 in pre-trading after rising earlier in the day after a Reuters report that it chose investment bank Houlihan Lokey, also named by troubled German tech company Wirecard, as an adviser.