Starbucks Challenger Luckin Isn’t All Out of Luck
A virus epidemic and a short-seller attack is a tough combination, but the Chinese coffee chain has some positives.
Take it away.
Photographer: FRED DUFOUR/AFP/Getty Images
China’s Luckin Coffee Inc. hasn’t been having much luck lately. The last thing a retail business in the middle of a breakneck expansion needs is a deadly virus that keeps consumers off the streets and away from malls. What could be more damaging? Perhaps an attack by short-sellers branding your business a fraud.
Shares in Nasdaq-listed Luckin Coffee plummeted 11% Friday after Carson Block’s Muddy Waters Capital tweeted that it has a short on the stock, citing an unattributed 89-page report it had received that alleged the chain has accounting issues and a broken business model. It could have been worse. Luckin shares were down as much as 27% before rival short-selling firm Citron Research defended the company, saying it was long the stock and the coffee chain’s business in China was “on fire.” Luckin called the allegations “misleading and false” in a filing Monday. Its shares closed 3.5% lower.