Luckin Coffee (NASDAQ:LK) is in the news Wednesday after a Nasdaq delisting notice was delivered to the company.
Luckin Coffee revealed the Nasdaq delisting notice on Tuesday. The company notes that the notice was given to it on May 15. It’s seeking a hearing with Nasdaq, which should take place between 30 days and 45 days after the request.
Luckin Coffee says that there are two reasons behind the Nasdaq delisting news. One of these is “public interest concerns as raised by the fabricated transactions,” revealed in a company filing. The other is the company’s “past failure to publicly disclose material information.”
The major decline to LK stock today comes after it spent over a month suspended from trading. With the stock finally back on the markets, investors are showing how little faith they have in Luckin Coffee to make a recovery.
Investors aren’t the only ones worried about Luckin Coffee. Quo Vadis Capital also has concerns. Here’s what its president told MarketWatch.
“We continue to see the most likely outcome as a complete wipeout for equity holders. Leaving aside the fraud, the figures that are available suggest that Luckin Coffee never had a viable business model. The company grew too fast and acquired customers via promotional offers, without ever proving the economics.”
Luckin Coffee will continue to trade on the Nasdaq at least until after its hearing reaches a conclusion.
LK stock was down 37.1% as of Wednesday afternoon. It’s also down 88.47% since the start of the year.
As of this writing, William White did not hold a position in any of the aforementioned securities.
