Luckin Coffee faces Nasdaq delisting following alleged fraud
Illustration: Sarah Grillo/Axios
Luckin Coffee (Nasdaq: LK), the Chinese coffee shop chain that recently fired its CEO and COO for falsifying sales data, yesterday received a delisting notice from Nasdaq. One source says that Luckin didn't sufficiently answer questions Nasdaq had asked.
Why it matters: This comes against the backdrop of Nasdaq tightening its listing standards for closely held companies and those that aren't sufficiently transparent about their accounting. It didn't explicitly cite Chinese issuers like Luckin, but its targets were clear.
What's next: Luckin will appeal Nasdaq's decision, and gets to keep trading on the exchange until its challenge is adjudicated.
The bottom line: It's been just one year since Luckin went public at nearly a $3 billion valuation, later rising to a whopping $13 billion, as investors clamored for a piece of China's homegrown rival to Starbucks. This morning's opening market cap was less than $700 million.