LK - Another Luckin Scandal Gives Investors Yet Another Reason to Sell
Shares of Luckin Coffee (NASDAQ: LK) fell on Monday on an otherwise positive day for the markets as the scandal-ridden Chinese coffee company received another lump of bad news: Chairman Lu Zhengyao will reportedly now face criminal charges in China after authorities apparently discovered emails from Zhengyao instructing employees to commit fraud.
Luckin had rocked the investing world back on April 2, when it launched an internal investigation into its own accounting practices. That eventually led to the admission that the company had fabricated as much as 40% of its sales. The scandal led to the resignation of the company's COO, Liu Jian, and subsequent findings then led to the firing of CEO Qian Zhiya. Zhengyao had initially stayed on as chairman, but it seems likely now that Zhengyao won't be there to oversee a potential turnaround, either. That poses the question, "Who is running Luckin at this point?"
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