Luckin Coffee is reportedly planning a return to the US stock market after the Chinese chain delisted following a $300 million accounting fraud
Luckin Coffeeis planning a return to the US stock market, according to a Financial Times report.
- The Chinese coffee chain was delisted in 2020 after it committed $300 million in accounting fraud.
- Luckin could relist by the end of this year after it exits bankruptcy, according to the report.
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Luckin Coffee is planning to try its luck again in the US stock market after it fabricated sales and committed $300 million in accounting fraud almost two years ago.
The Chinese coffee chain is planning to relist its stock on the Nasdaq by the end of this year, according to a report from the Financial Times. Citing two people familiar with the matter, Luckin Coffee believes it can offer investors an attractive opportunity after it brought in new management and has seen recent growth at its stores.
According to the report, Luckin's third-quarter revenue jumped 106% to $370 million, though the strong growth can likely be attributed to a decline in year-ago sales during the first year of the COVID-19 pandemic. Luckin operates 5,671 stores, about 500 more stores than Starbucks operates in China.
Shares of Luckin Coffee, which trade over the counter with a $2.5 billion valuation, jumped as much as 20% in Wednesday trades. The coffee chain saw its valuation peak around $13 billion in early 2020.
To settle its accounting fraud charges, Luckin Coffee agreed to pay $180 million to the Securities and Exchange Commission, had its stock delisted from the Nasdaq in June 2020, and ultimately entered bankruptcy. Since then, Luckin has restructured some of its debt, paid down a sizable portion of its SEC fine, and appointed new auditors.
Because Luckin continued to report quarterly earnings as its traded over the counter, a relisting on the Nasdaq could present fewer regulatory hurdles for the company compared to the traditional US IPO process, a person close to the situation told the FT.
Regulatory scrutiny towards Chinese companies seeking to go public in the US has been rising, with proposed legislation requiring said companies to be audited by US companies.
Meanwhile, Chinese companies listed on US exchanges have also seen pressure from authorities in Beijing, with data security concerns leading to a botched IPO of ride-hailing company Didi. The company is now delisting its stock from the New York Stock Exchange, just six months after its debut, and relisting in Hong Kong.
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