Shares of China's Luckin Coffee Plunge on Wall Street After Fraud Probe.
On Thursday, April 2nd, the Chinese coffee giant, Luckin Coffee opened down nearly 75% on Wall Street after accusations of fraud. This comes months after the hedge fund Muddy Waters Research took a sizable short position on the coffee chain, in which the hedge fund publicly stated that the company was operating under fraudulent financial statements.
A fraud probe is underway, as the Luckin stands accused of falsifying nearly $310 million dollars of sales totaling from their last 2 financial quarters and their chief operating officer, Jian Liu has been suspended form the companies daily operations.
This isn't the first time a Chinese based company has swindled American investors. The systemic securities fraud was recently featured in the critically acclaimed documentary The China Hustle, where due to lack of scrutiny and accountability in their financial reporting, many of these Chinese companies were able to steal millions of dollars from investors looking to gain from China's economic "success".
Shares of Luckin Coffee continued to trade lower on Friday, ending the week nearly 80% down from a week ago.