Luckin Coffee shares crash on delisting risk (updated)

Luckin Coffee

20/05/2020 13:55

(Adds share milestones, background, analyst comment)
    May 20 (Reuters) - Shares in Luckin Coffee Inc  LK.O 
slumped almost 40% to a record low in premarket trade on
Wednesday, as they resumed trading after more than a month's
halt and a day after the Chinese coffee chain said it received a
delisting notice from Nasdaq  NDAQ.O .
    Luckin Coffee said on Tuesday that Nasdaq had notified the
company of plans to delist it from the U.S. stock exchange, a
month after the company disclosed that some employees had
fabricated sales accounts.  urn:newsml:reuters.com:*:nL1N2D10Q8
    The coffee chain's stock, which has lost more than 90% of
its value this year, fell to a low of $2.69 in premarket trade
on Wednesday, a far cry from its peak of $51.38 in January. 
    Nasdaq's notice comes as the exchange renews its focus on
auditing standards. This week it tightened listings rules,
hoping to curb initial public offerings of Chinese companies
closely held by insiders and opaque about accounting, Reuters
reported.  urn:newsml:reuters.com:*:nL1N2D100Y
    In its delisting notice, the bourse cited public interest
concerns raised by the fabricated transactions and Luckin's
failure to disclose material information.
    "The type of scandal in our opinion is too severe to allow
the company to be listed on the U.S. stock market," Zephirin
Group analyst Lenny Zephirin told Reuters.
    Luckin, a rival to Starbucks  SBUX.O  in China, plans to
challenge the move before a Nasdaq hearing panel, and will
remain listed until the outcome, which is most likely within two
months.

 (Reporting by Noor Zainab Hussain and additional reporting by
Abhishek Manikandan in Bengaluru; Editing by Maju Samuel and
Vinay Dwivedi)
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