The long awaited Luckin Coffee (LK) resumes trading today at market open, some analysts are betting a huge dump or surge may occur, investor sentiment points to a huge surge in stock price.
In my analysis I see a downward opening when the bell rings, after all the ‘accounting fraud’ that occurred I don’t think anyone would be willing to hold this stock any longer.
Luckin Coffee (LK) may get delisted
To add the the downward opening there are talks of Luckin Coffee getting delisted which may add to the downward momentum.
The prospect of delisting is likely to trigger a rush for the exit by Luckin’s remaining shareholders, adding to a long list of challenges for the company as it tries to recover from its disclosure that senior executives fabricated about $310 million in sales. Banks including Credit Suisse Group AG, Morgan Stanley and Goldman Sachs Group Inc. are among those with money at stake, after the firms seized control of shares that Luckin’s chairman had pledged as collateral for loans.
“I can’t see what else investors would do other than dump the stock,” said Hou Anyang, a fund manager at Frontsea Asset Management Co. in Shenzhen.
Shares fell 33% to $2.94 each at 7:06 a.m. in New York. The stock had reached as high as $51.38 at its peak in January.
Luckin’s dramatic fall from grace has made the company a poster child for concerns about Chinese corporate governance, fueling a debate in Washington over the extent to which American money and capital markets should be accessible by firms from a growing geopolitical rival.
Luckin has reacted actively according to the initial results of the investigation, including terminating some relevant management and restructuring the board, My personal style may have been too aggressive and led the companies to run too fast, which has triggered many problems.
Lu Zhengyao – Luckin Coffee Chairman
As more news gets out it is certain that the stock will get delisted as stated here in this recent news post from South China Morning Post.
Luckin Coffee (LK): Buy or sell?
Shares of Luckin Coffee, overall, appear to be a very bad investment option, with Wall Street analysts expecting its price to drop considerably in the next several months. The majority of the metrics point to this investment being highly unattractive short term investment.
