LKNCY Stock Alert: Why Is Luckin Coffee Brewing Gains Today?

One of the best-performing Chinese stocks in the market today is Luckin Coffee (OTCMKTS:LKNCY). That’s right, the same Luckin Coffee that got slammed with a $180 million fine for reportedly “augmenting” $300 million in sales. Today, LKNCY stock has surged 19% higher in afternoon trading, though this stock did soar more than 25% in earlier trading.

close up luckin coffee's logo coffee brand in Shanghai, June 2019.
Source: NewsToday / Shutterstock.com

Luckin Coffee was removed from the Nasdaq exchange and forced to pay a fine as a result of accounting fraud charges in mid-2020. Additionally, Luckin filed for bankruptcy protection, which the company will reportedly exit some time this year. Following the company’s exit from bankruptcy, sources say the Chinese coffee chain could look to re-list in the U.S.

Luckin still trades approximately 75% below its 2020 peak, making this stock an attractive investment for those seeking value in today’s pricey market. However, this is still a company battling headwinds. In particular, how difficult it will be to re-list on a U.S. exchange remains to be seen.

Let’s dive a bit deeper into Luckin’s plans to re-list and what this means for investors.

LKNCY Stock Surges on Re-Listing Efforts

Today’s news may not necessarily come as a shock to investors. After all, many de-listed companies seek to re-list. The Nasdaq is one exchange that sees a heavy load of re-listings, due mainly to the more speculative nature of many of the companies on this index.

Indeed, Luckin is a company that’s looking to raise growth capital. As a fast-growing coffee chain in China, Luckin is looking to expand. As the pandemic winds down, there’s a reason why investors are looking at this company as an attractive reopening play. Accordingly, seeking out financing from U.S. investors appears to be a logical step.

However, as mentioned, the ease at which Luckin will be able to re-list remains to be seen. The pandemic isn’t over, and the relationship between China and the U.S. remains on somewhat shaky ground.

However, the announced intention to re-list is apparently enough for many investors today. Accordingly, LKNCY will be one over-the-counter stock investors may want to put on their watchlists right now.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.


Article printed from InvestorPlace Media, https://investorplace.com/2022/01/lkncy-stock-alert-why-is-luckin-coffee-brewing-gains-today/.

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