Luckin Coffee is poised for expulsion from Nasdaq as it withdraws request for oral appeal hearing
- Xiamen-based start-up’s shares will be suspended at the open on Monday
- New York exchange will file a delisting notification when all appeal periods have expired
Luckin Coffee said on Friday it had withdrawn a request for an oral hearing submitted to the Nasdaq exchange in New York, paving the way for its delisting.
The Xiamen-based start-up, often viewed as China’s answer to Starbucks, said in a statement that it would “not to seek to reverse or stay the listing qualification staff’s determination of delisting the company from the Nasdaq global select market”.
The company said it had been notified by Nasdaq that its shares would be suspended at the open on Monday. The exchange will file a delisting notification when all appeal periods have expired. Once that happens, the coffee chain will officially withdraw from the market.
Luckin’s shares, which have lost more than 85 per cent of their value since the company announced an internal investigation into some employees fabricating sales, tumbled 55 per cent after trading was halted by circuit breakers five times in an hour after the US markets opened.
The company received a second delisting notice from Nasdaq on Tuesday after it failed to file its annual report.
An anonymous short-seller report released by activist investment firm Muddy Waters in January said that Luckin, best known for its online ordering, steep discounts and cheap delivery, had inflated turnover between the second and fourth quarters of 2019.
In April, the company admitted its turnover for this period had been inflated by about 2.2 billion yuan (US$310.7 million), and that certain costs and expenses were “substantially inflated” through the fabrication of transactions.
In May, Luckin fired Jenny Qian Zhiya, its chief executive, and Liu Jian, its chief operating officer, after an internal investigation into fabricated transactions that roiled investors and undermined trust in Chinese financial reporting.
Since its founding in 2017 by former billionaire Charles Lu Zhengyao, Luckin has expanded rapidly, and was operating more than 3,500 locations globally as of late 2019. It was listed on the Nasdaq in May last year.