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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

Erica Pandey, author of @Work
1 hour ago - Economy & Business

What's really going on with the labor market

Source: YCharts

The labor market is showing some signs of improvement: Jobless claims fell to 730,000 — a dramatic drop from 841,000 the previous week. And the latest jobs report showed a pandemic-era low unemployment rate of 6.3%

But, but, but: That's not the full story, experts say.

Felix Salmon, author of Capital
2 hours ago - Economy & Business

Markets see rare convergence milestone

Expand chart
Data: YCharts; Chart: Axios Visuals

A milestone was reached in the markets Thursday: The yield on the 10-year Treasury note rose to match the dividend yield on the S&P 500

Why it matters: The two yields have been inverted since the beginning of last year, which is historically unusual.

Mike Allen, author of AM
2 hours ago - Economy & Business

First look: Business puts muscle behind Biden

Business Roundtable, the voice of America's top CEOs, today launched "Move the Needle," a campaign to support President Biden in rolling out COVID vaccines, increasing vaccine uptake and encouraging masks.

What they're saying: "Masks and vaccines are working. Now is the time to keep at it, overcome pandemic fatigue, and double down on the measures that will end this public health and economic crisis, said Business Roundtable president and CEO Josh Bolten.