Coffee Chain Turns Fraud Into Reality
Today we will talk about the revival of luckin coffee. But first some context.
Many of you know what luckin coffee is. The disgraced coffee empire that should have become the Starbucks of china. Luckin coffee went from an aspiring coffee behemoth to the black sheep of the coffee industry overnight.
The company Starbucks was afraid of once has fallen under hard times. Luckin coffee has only itself to blame for faking its financial accounts.
Luckin Coffee sold less coffee than what they claimed to have sold. This is a big no no in the investing community.
This was the straw that broke the camel's back. Luckin Coffee's ceo was kicked out of the company. Luckin coffees stock was delisted from the nasdaq. China’s top watchdog fined luckin coffee, 9 million dollars for lying to investors.
The SEC was less forgiving, fining them 180 million dollars to settle fraud charges and accounting irregularities.
300 million dollars of fake coffee sales had to be removed from luckin coffee’s accounting books.
Obviously the financial fraud took a toll on luckin coffee’s stock price which went from 50 dollars a share to a dollar 30 per share. A dip it never completely recovered from since.
The blue luckin logo with a white stag became a sign of financial fraud for investors placing bets in the Chinese stock market.
The only future luckin coffee had, as far as everyone was concerned, was to fade into obscurity like the lying infidel it showed it was.
Investors had sipped enough of the bitter taste of luckin coffee. It was time to frequent another coffee chain. Basically Starbucks because where else can you go for overpriced coffee.
Then everything changed when luckin coffee returned stronger than ever.
Investors were delightfully confused when they realized luckin coffee was doing the impossible.
#china #coffee #wallstreet