Luckin Coffee Inc. (LK) Accused of Misleading Shareholders
According to the complaint for alleged violations of the Securities Exchange Act of 1934 between November 13, 2019 and January 31, 2020, on November 13, 2019, Luckin Coffee, Inc. (LK) issue a press release announcing its financial and operating results for 3Q19, which highlighted positive increases in average monthly total items, total net revenues, and store level operating profit. However, on January 31, 2020, Muddy Waters reported that Luckin had fabricated several financial figures based on a review of thousands of store videos and receipts. Then, on February 12, 2020, J Capital, a China-focused investment research firm, published a detailed report supporting the findings in the Muddy Waters Report. These findings were finally confirmed by the Company on April 2, 2020, when Luckin disclosed that an internal investigation revealed that its chief operating officer had fabricated 2019 sales by about $310 million. Since this news the stock price has fallen precipitously, currently trading at around $4.40 per share, representing a 91% decline from its class period high of $50.02 per share.