Opinion and rhetoric. Do you even know of what you speak?
Let’s play to your point, Luckin coffee is relatively recent and massive IPO that has, in a year’s time, fabricated it’s entire business and become a ghost coffee company that is supposedly operating under the protective cloak of the Chinese communist regime, yet you say they will be held accountable and have recently fired executives who will be sent to prison? LK fooled some of the largest institutional banks and investors, including the likes of Goldman Sachs and Blackrock, with their phantom business model and prospectus. Executives will now be held accountable and sent to prison....by whom, Chinese regulators, the communist militia? A government who enjoys fleecing American businesses and stealing their IP? Why would LK audit at all, no one is looking? Why fire top brass? Why come clean?
They voluntarily reported the overages and cooked books, yet had no responsibility to do so as a Chinese listed company. Chinese companies are currently not held to the same reporting criteria and regulation as non-Chinese listed companies. They could have easily played the fraud game for years without SEC investigation. Worldcom and Enron Mgt turned the other cheek for several Q’s without revelation and they existed right here in the good ole US of A. Why would Luckin give any indication of unscrupulous behaviors if they were a fraud. They were just listed. They have their billions. Why would a fraud shine a light on their books? I’m sure executives made out handsomely since the IPO. Why would they turn on each other?
Further, they recently sold $500 million of their debt. Does that sound like a shell of a company? This is brick and mortar. Not a dot com shell company. Their assets are easily valued and validated. You don’t sell that kind of debt if you are a ghost company that has recently revealed fraudulent sales entries. They exist. They have real stores. Google it. Current valuation is $540 million. A fraction of their IPO value. Which makes this a worthy gamble.
Finally, the potential delisting legislation presented by this administration currently has to do with Chinese government backed or owned securities listed on the US exchanges. They don’t qualify. They could however be delisted thru their own accounting actions and non-compliance with Nasdaq regulatory rules, but that can has been kicked down the road. They requested a hearing which can take up to 30-45 days to be heard. Again, creating a short-term worthy gamble. If they get a compliancy nod and remain on the exchange, their stock will fly. Upside vs downside risk. I’ll take the up here. Also, anyone buying here clearly understands the risk, no different than buying into one of the many hyped Bio’s currently in clinic or trials to develop a treatment or vaccine for the Covid virus nightmare cast upon us by those Eastern commies. So many bios have fleeced shareholders thru hyped clinical claims followed by immediate offerings. Is that criminal? It should be, but they do it all the time to raise money. Moderna’s recent unscrupulous acts seem equally as intentional as LK’s willingness to fluff the books. Both fleeced their shareholders that bought in at much higher prices. Time will tell if either will revisit those highs, but I’ll bet on Chinese coffee over a shot in the dark clinical Hail Mary, especially at these prices. If you want a safety net, buy proctor and gamble and save the preaching for teenagers not practicing social distancing. Cheers!
F4T
