Chinese chain store Luckin Coffee released an amended 2019 financial statement on Wednesday, its first financial reports since it admitted to fabricating sales in April 2020.

Luckin’s stock price jumped up more than 20% on the news. The company was delisted from Nasdaq in June 2019 and now trades through the over-the-counter market or pink sheets.

Why it matters: The filing revealed that the company spent almost twice what it earned in 2019, suggesting that giving away free coffee may not be a sustainable business model. It reported a loss of $454 million for the year, compared to $434.5 million in revenue. The statement also confirmed how the size of the fraud, and gave the amount of fictional costs for the first time.

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Details: Luckin released restatements of unaudited results of the second and the third quarter of 2019, as well as an unaudited result of the fourth quarter of 2019. The fourth-quarter result, released for the first time to the public, was postponed due to the fraud scandal.

  • Luckin disclosed in the update that the company inflated its 2019 revenue by nearly RMB 2.12 billion ($328.3 million), slightly less than the RMB 2.2 billion previously estimated. The company’s fabrication grew more than four times over the quarters of 2019, from RMB 250 million in the second quarter to RMB 1.17 billion in the fourth quarter.
  • According to the new figures, net revenue in the second and third quarters of 2019 reached RMB 653.4 million and RMB 843.2 million, respectively, restated from RMB 870.0 million and RMB 1.5 billion in earlier, false filings.
  • Luckin reported losses of RMB 1.13 billion on RMB 1.05 billion in revenue for the fourth quarter of 2019. The losses doubled from the same period last year, while revenue went up 125.6%. 
  • Total operating expenses in the fourth quarter of 2019 were RMB 2.19 billion, representing an increase of 97.2% from the same period a year ago. The company says this growth was driven by business expansion. 
  • The company attributes the growth in revenue in the fourth quarter to attracting new customers and repeat customers by issuing coupons, discounts, and adding non-coffee drinks. 
  • Luckin said on Wednesday in a separate statement (in Chinese) that as of June, it operates more than 5,200 stores in China. The statement, if verified, could mean the company has again overtaken Starbucks as the largest coffee chain store in China. Starbucks runs 5,000 stores in the country, according to its website.

Context: Luckin admitted accounting fraud in April 2020. Several employees, including its COO, had fabricated transactions for much of 2019, amounting to an estimated RMB 2.2 billion in falsified sales.

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.