UCar completes 53 per cent loss in week as Luckin Coffee scandal continues to infect owner of China’s top ride-hailing firm

UCar shares closed unchanged at 1.06 yuan on the NEEQ market for SMEs a day after losing US$462.8 million in market value

Shares have lost 93 per cent of their value, precipitated by the Luckin Coffee scandal

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Ride-hailing operator UCar’s shares have been under pressure since Luckin Coffee’s accounting scandal emerged in April. Photo Xinhua

Published: 6:05pm, 21 Aug 2020Updated: 6:05pm, 21 Aug 2020

Ucar, owner of one of China’s biggest ride-hailing firms, slumped 53 per cent this week after investors dumped the stock upon resumption of trading as it sought more time to publish its accounts and failed to distance itself from the scandal involving Luckin Coffee.

The company, controlled by Luckin Coffee’s co-founder Charles Lu Zhengyao, closed at 1.06 yuan on Friday from 2.25 yuan when they were halted from trading on June 30 on National Equities Exchange and Quotation or NEEQ, an over-the-counter market for local small and medium-sized enterprises. The stock slumped on Thursday and was little-changed on Friday.

The slump this week wiped out 3.2 billion yuan (US$462.8 million) from its market capitalisation.

UCar’s shares have been under pressure by association since Luckin Coffee’s accounting scandal emerged almost four months ago. The coffee chain, dubbed as China’s Starbucks, said on April 2 that several top executives had fabricated sales worth 2.2 billion yuan from the second to the fourth quarters of 2019.

The scandal contributed to Washington tightening scrutiny of Chinese companies listed on American bourses, stoking a broader spat between regulators in the world’s two largest economies which have already been entangled in rising tensions.

Charles Lu Zhengyao, who controls UCar, is also the co-founder of Luckin Coffee. Photo: Simon Song