China’s Starbucks rival Luckin Coffee shares crash on delisting risk

A customer exits a Luckin Coffee outlet in Beijing, China, on Tuesday, Jan. 15, 2019. Photographer: Gilles Sabrie/Bloomberg

Shares in Luckin Coffee Inc slumped almost 40% to a record low in premarket trade on Wednesday, as they resumed trading after more than a month’s halt and a day after the Chinese coffee chain said it received a delisting notice from Nasdaq.

Luckin Coffee said on Tuesday that Nasdaq had notified the company of plans to delist it from the U.S. stock exchange, a month after the company disclosed that some employees had fabricated sales accounts.

The coffee chain’s stock, which has lost more than 90% of its value this year, fell to a low of $2.69 in premarket trade on Wednesday, a far cry from its peak of $51.38 in January.

Nasdaq’s notice comes as the exchange renews its focus on auditing standards. This week it tightened listings rules, hoping to curb initial public offerings of Chinese companies closely held by insiders and opaque about accounting, Reuters reported.

In its delisting notice, the bourse cited public interest concerns raised by the fabricated transactions and Luckin‘s failure to disclose material information.

“The type of scandal in our opinion is too severe to allow the company to be listed on the U.S. stock market,” Zephirin Group analyst Lenny Zephirin told Reuters.

Luckin, a rival to Starbucks in China, plans to challenge the move before a Nasdaq hearing panel and will remain listed until the outcome, which is most likely within two months.

Reuters

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.