Luckin Coffee faked sales
Buffett's expression is that you find out who has been swimming naked but the point is the same.
The latest is Luckin Coffee (LK on the Nasdaq). Their story of growing to 4,500 locations in China from zero in two years was amazing but it turns out it was also a total fraud.
The company suspended the COO and announced:
The information identified at this preliminary stage of the Internal Investigation indicates that the aggregate sales amount associated with the fabricated transactions from the second quarter of 2019 to the fourth quarter of 2019 amount to around RMB2.2 billion [more than $310m]. Certain costs and expenses were also substantially inflated by fabricated transactions during this period.
Shares of the company have dropped to $4 in the pre-market from $26.20 at yesterday's close -- an 84% drop. It was at $50 in January. It did an IPO in May 2018.
