- Luckin Coffee confirms that it received 2nd de-listing notice from Nasdaq.
- The Chinese coffee company tanked another 18% in premarket trading on Tuesday.
- Luckin Coffee is scheduled to hold an extraordinary general meeting in July.
Luckin Coffee (NASDAQ: LK) confirmed on Tuesday that Nasdaq sent it a de-listing notice last week as the Chinese coffee company failed to report its annual financial results. Following the announcement, Luckin Coffee was reported about 18% down in premarket trading on Tuesday.
Compared to Luckin’s year to date high of £40.05 per share in mid-January, shares of the company are now roughly 95% down. At £2.19 per share, the coffee company has tanked over 85% since April. Learn more about why prices rise and fall in the stock market.
Nasdaq sent its first de-listing Notice to Luckin Coffee in May
Luckin also disclosed it to be the 2nd notice from the United States stock exchange. The first one, the coffee chain said, was received in May following the launch of an investigation into its top executive who was accused of fabricating the company’s financial report. Luckin’s chief operating officer, Jian Liu, was charged with overestimating Luckin’s sales in 2019 by a massive £250 million.
Luckin had previously pledged millions of shares to secure a sizeable loan. Owing to the internal probe announced in April, however, the company has now defaulted.
In its response to Nasdaq’s notice, the Xiamen-headquartered company that rivals Starbucks in China, remarked on Tuesday:
“The company has been working diligently to explore possible ways to file the annual report as soon as possible. However, the company has not been able to file the annual report due to the impact of the delayed financial statement preparation process caused by COVID-19 and the pendency of the previously disclosed internal investigation.”
COVID-19 has so far infected a little under 85,000 people in China and caused more than 4,600 deaths.
Luckin Coffee to hold an extraordinary general meeting in July
Luckin Coffee is scheduled to hold its extraordinary general meeting in July. Based on voting in this meeting, the company will decide if several of its directors, including chairman Charles Zehngyao Lu, should be ousted. Cayman Islands court recently allowed Luckin’s lenders, including Credit Suisse, to wind down Zehngyao Lu’s offshore assets. The lenders are currently seeking to recover about £259 million of outstanding debt.
Amidst the ongoing financial struggles, the Chinese coffee chain recently hired the U.S. investment bank, Houlihan Lokey, to devise a new financial strategy for the company. The investment bank was also approached by the struggling German fintech company last week following a massive accounting scandal of £1.7 billion.
At the time of writing, Luckin Coffee has a market cap of £580 million.