Nasdaq really wants Luckin Coffee off of its listing.
The troubled Beijing-based coffee chain on Tuesday said that it has received its second delisting notification from the stock exchange, this time over its failure to file an annual report on time. Luckin said it received the notice last week.
The news sent Luckin’s shares down 17%. Though it does its business in China, Luckin is traded in the U.S.
The company’s stock price has lost 95% of its valuation since January.
Luckin’s downfall has been considerable over the past few months. The company became an overnight sensation in China with its rapidly growing roster of digital-friendly coffee shops. It raised $570 million in a U.S. public offering last year, and shares soared afterwards. Its growth briefly put giant Starbucks on its heels—China is a major market for the Seattle chain.
In February, however, a short seller began questioning the validity of the company’s transaction growth and cited concerns that China isn’t quite the coffee market that Luckin said it was. Muddy Waters Research called Luckin “a fundamentally broken business.”
Luckin denied the allegations but in early April it acknowledged a massive fraud led by the company’s chief operating officer. The fraud suggested that a huge percentage of its revenue last year was outright fabricated.
The company’s CEO was terminated in May.
Luckin has been dealing with the aftermath ever since. Last month, Nasdaq issued Luckin its first delisting notice, “public interest concerns” due to the fabricated transactions, and the failure to disclose “material information.”
A delisting threatens a company’s ability to raise cash because delisted companies can only be traded over the counter, meaning people have to make appointments to arrange a trade.
The Wall Street Journal reported earlier this month that various banks won court orders to liquidate millions of dollars in stock owned by Luckin’s chairman, Charles Lu.
The company has also been losing directors. One director Tianruo Pu, notified the company of his decision to step down last week.
Luckin also said last week that it would be unable to file its annual report. The company blamed the delay on its internal investigation into the transaction fabrications, as well as the impact of the coronavirus.
The Luckin Coffee scandal has led Nasdaq to consider tightening rules on foreign companies that want to list their stocks on the U.S.-based exchange.
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