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Photo: Visual China Group via Getty Images/Visual China Group via Getty Images

Luckin Coffee (Nasdaq: LK), a Chinese rival to Starbucks that went public last year at a $4.3 billion valuation, disclosed that its chief operating officer fabricated around $310 million in 2019 sales.

Why it matters: This raises big questions about due diligence by Luckin's IPO bankers, who subsequently worked on both a secondary share sale and convertible bond offering that relied on the inflated data.

  • Market reax: Luckin went public at $17 in May 2019. It hit a closing high of $50.02 per share in January, before the coronavirus knocked it down to $26.20 on Wednesday. One day later, it closed at $6.40 per share and is poised to open even lower today.
  • The bottom line: "An anonymous report publicized by U.S. short-seller Muddy Waters earlier this year raised suspicions about the company’s accounting. Luckin said at the time that the report was false, misleading and irrelevant. But in fact it seems very relevant. One interesting allegation, beyond the fabrication of revenue, is that Luckin manipulated order numbers in its app to give an embellished image of its business. More sophisticated investors relied on third-party vendors to collect data beyond companies’ financial statements. But if this accusation is well-founded, that means they need to pay even closer attention to the question of what data can reasonably be trusted." Jacky Wong, WSJ

Go deeper

Democrat Mark Kelly sworn in to U.S. Senate

Photo: Courtney Pedroza/Getty Images

Astronaut Mark Kelly (D) was sworn in to the U.S. Senate on Wednesday after defeating incumbent Sen. Martha McSally (R-Ariz.) last month for the seat once held by the late Sen. John McCain.

Why it matters: Kelly's swearing-in by Vice President Mike Pence narrows the Republican majority and moves the Senate balance to 52-48.

Senate Armed Services chair dismisses Trump threat to veto defense bill

Sen. Jim Inhofe. Photo: Anna Moneymaker/Pool/AFP via Getty Images

Sen. Jim Inhofe (R-Okla.), chair of the Senate Armed Services Committee, told reporters Wednesday that he plans to move ahead with a crucial defense-spending bill without provisions that would eliminate tech industry protections, defying a veto threat from President Trump.

Why it matters: Inhofe's public rebuke signals that the Senate could have enough Republican backing to override a potential veto from Trump, who has demanded that the $740 billion National Defense Authorization Act repeal Section 230 of the Communications Decency Act.

Scoop: Uber in talks to sell air taxi business to Joby

Illustration: Sarah Grillo/Axios

Uber is in advanced talks to sell its Uber Elevate unit to Joby Aviation, Axios has learned from multiple sources. A deal could be announced later this month.

Between the lines: Uber Elevate was formed to develop a network of self-driving air taxis, but to date has been most notable for its annual conference devoted to the nascent industry.