[{"_1":2,"_76":-5,"_77":-5},"loaderData",{"_3":4,"_6":7},"root",{"_5":-5},"user","routes/tag.$slug",{"_8":9,"_65":66,"_73":68,"_74":56,"_75":57},"posts",[10],{"_11":12,"_13":14,"_15":16,"_17":18,"_19":20,"_21":22,"_23":24,"_25":26,"_27":28,"_29":30,"_31":32,"_33":-5,"_34":35,"_36":37,"_47":48,"_58":59,"_60":61,"_62":63,"_64":32},"documentId","utnay42dkg13rbs374klmyjy","title","Luckin Coffee Plunges 75% As Private Investigation Reveals Falsified Accounts","slug","luckin-coffee-plunges-75-as-private-investigation-reveals-falsified-accounts","excerpt","An internal investigation by Luckin Coffee has revealed that hundreds of millions of dollars of sales in 2019 were “fabricated”, wiping almost 75 percent from the value of the company.","content","\n

Chinese coffee chain Luckin Coffee has been dazzling Wall Street and public market investors with its exceptional growing speed. However, these accounts may all be false. An internal investigation by Luckin Coffee has revealed that hundreds of millions of dollars of sales in 2019 were “fabricated”, wiping almost 75 percent from the value of the company.

The company has formed a special committee of three independent directors to investigate \"misconduct, including fabricating certain transactions\" that spanned the second through fourth quarters of 2019 and involves 2.2 billion RMB (about $310.1 million). The committee announced that Liu Jian, former COO and director of the company would be the target of this investigation. Liu is now suspended, together with other staff members implicated in this misconduct.

SEE ALSO: Luckin Coffee Denies Short Selling Allegations As Share Price Rebounds 15.6%

Luckin was the target of a short attack in early February after Muddy Waters, a firm known for its bearish bets on air stocks, questioned the legitimacy of some of Luckin’s recent metrics. Luckin strongly denied allegations in an anonymous report that cited possible fraudulent behaviour at that time.

Early stages of the internal investigation indicate that the total amount of sales related to the fraudulent transactions from the second to the fourth quarter of 2019 was approximately 2.2 billion yuan. During this period, certain costs and fees were also inflated by bogus transactions.

\"As a result, investors should no longer rely upon the company's previous financial statements and earning releases for the nine months ending September 30, 2019 and the two quarters starting April 1, 2019 and ending September 30, 2019, including the prior guidance on net revenue from products in the fourth quarter of 2019, and other communications relating to these consolidated financial statements,\" Luckin Coffee said in a statement.

Luckin Coffee has been known as the Chinese challenger of Starbucks. The company had its US IPO in May 2019. Despite the large amounts of capital it has received, the chain remained unprofitable.

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Tag: #company falsified account

Luckin Coffee Plunges 75% As Private Investigation Reveals Falsified Accounts