Shares of Luckin Coffee plunged 12.3% on Tuesday after disclosing that it received a second delisting notice from the Nasdaq exchange.
Why it matters: A second notice adds weight to the troubled coffee chain’s potential to delist. The company’s share prices have plunged upwards of 80% since admitting accounting fraud in April.
- The second notice comes less than a month after the firm received a delisting notice on May 19 for “public interest concerns” and “fabricated” transactions.
Details: The delisting notice was sent in response to the company’s failure to file a Form 20-F, or annual report, for the period ended December 31, 2019, according to a statement from the company.
- The company says it has been “working diligently to explore possible ways to file the annual report as soon as possible” citing Covid-19 and the internal investigation as reasons for the delay.
- The US Securities and Exchange Commission requires foreign private share issuers to file their annual reports within four months of the end of the fiscal year.
Context: The company’s shares surprised with a 21.6% rally in late May attributed to rumors that restaurant giant Yum China and Tencent-backed fast food chain Tim Hortons China were considering purchasing company assets including its app and customer data, in addition to speculation on social media that the company would be acquired.
- Banks including Credit Suisse have won a court order seeking to liquidate entities controlled by Luckin Coffee Chairman Lu Zhengyao, or Charles Lu, according to a SCMP report.
- Chinese car rental Car Inc may soon sever all formal ties to Lu, founder of Luckin, Car Inc, and Ucar.