The astounding fraud admission from beverage chain Luckin has put more US-listed Chinese companies in regulator and short-seller crosshairs.
While the CEO and COO take the fall, Luckin non-executive chairman and driving force behind CAR Inc., Lu Zhengyao, remains unscathed.
Shares slid overnight after losses hit nearly $100 million in the quarter.
Luckin Coffee and Tencent have been partners since Sept. 2018.
Luckin is under financial pressures as the startup coffee chain is showing signs of overheating.
The company said it operates 100% under the direct sales model and has not accepted franchising of any form.
Luckin Coffee, the coffee shop startup using market acquisition tactics borrowed from China’s internet companies, has written an open letter to Starbucks accusing it of monopolistic practices in the country and proposing a possible lawsuit, according to Tencent News (in Chinese). Luckin has taken issue with Starbucks’ exclusivity rights with property owners and putting pressure […]