At least 10 US law firms have announced investigations into Chinese beverage chain Luckin Coffee on behalf of the company’s investors as of Friday.

Why it matters: Luckin may soon find itself under US regulator scrutiny amid a dramatic downturn for most of the broader food and beverage industry as a result of the coronavirus outbreak.

Details: US shareholder rights litigation firms announced an investigation into whether the company had fabricated several operational and financial numbers, including per-store per-day sales, net selling price per item, advertising expenses, and others.

  • The law firms include Gross Law Firm, Pomerantz LLP, Schall Law Firm, Levi & Korsinsky LLP, Bronstein, Gewirtz & Grossman, LLC, The Law Office of Vincent Wong, The Klein Law Firm, Bragar Eagel & Squire, and P.C. Law Offices of Howard G. Smith.
  • Luckin did not respond to TechNode’s inquiries about the impact of the Covid-19 outbreak on its first quarter performance.
  • US rival Starbucks’ outlook may shed some light on the impact of the epidemic on the broader industry. The US coffee chain, which closed half of its 4,300 stores in China since January, expects China sales in stores opened for at least a year to drop by about 50% in the quarter ended March. Revenue loss resulted from the epidemic would amount to $400 million to $430 million during the period.

Context:  The allegations in the investigations may sound eerily familiar to the coffee chain. In late January, short seller Muddy Waters Research tweeted an 89-page, anonymous report alleging several instances of fraud.

  • The report claimed Luckin’s number of items per store per day was inflated by at least 69% in Q3 2019 and 88% in Q4, and that items per order declined sequentially in Q4 to 1.14 from 1.38.
  • Luckin’s share price fell $3.91 per share, or 10.74%, to close at $32.49 per share on Jan. 31, 2020 as a result of the report.
  • The company responded on Feb. 4 to the fraud allegations, denying all accusations laid out in the report, calling it misleading, flawed, and meritless.

Emma Lee (Li Xin) was TechNode's e-commerce and new retail reporter until June 2022, when she moved to Sixth Tone to cover technology and consumption. Get in touch with her via or Twitter.

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