Chronic. Luckin is a business without a boss. Its founder, Lu Zhengyao, or Charles Lu, was dismissed by a board of directors on Sunday July 5. The company, accused of fabricating more than $ 300 million in false sales, was suspended from trading at the Nasdaq in New York on Friday, the first step in an eviction process. The end of a financial thriller, which has given reason for the defenders of a law to ban Chinese companies from the US stock market, in full economic decoupling between the two largest economic powers in the world.
Founded in 2017, Luckin is a company that has sold coffees to the Chinese middle class and dreams to investors. Like any self-respecting start-up, it promises to "disrupt" established players in the industry, most notably Starbucks. His model is to offer only take-out or delivery, installing simple counters to save on real estate.
The value of the company, which had reached $ 12 billion, drops to less than a billion
The company also forces customers to place their orders online through an application to collect their personal data. Coffee is nothing special, but thanks to generous promotions, prices are two to three times lower than those of competitor Starbucks.
In 2018, Luckin opens new cafes every few hours. Investors are jostling. After a year and a half of existence, the company is raising Nasdaq $ 651 million. Six months later, Luckin announces sales up 558% year on year. In January 2020, the Luckin share has almost tripled in value since its introduction to reach $ 50.
A mysterious report
It was then that a mysterious report overturned the golden tale sold by Charles Lu to its shareholders. Distributed by Muddy Waters, a US finance company specializing in down betting, the report says sales must be rigged, based on thousands of hours of video surveillance to count the brand's customers. Two months later, the company admits to having falsified more than $ 300 million in sales, using vouchers bought by Luckin employees or front companies owned by relatives of the founder. The value of the company, which had reached 12 billion dollars (10.613 billion euros), falls to less than a billion.
You have 49.44% of this article to read. The suite is reserved for subscribers.
