Why Jim Cramer Approves Nasdaq Changes? Greed Was Letting 'Stupid' Companies IPO
Nasdaq is reportedly going to set new restrictions on initial public offerings, or IPOs, which could make it harder for some Chinese companies to debut on the stock exchange.
The news was reported by Reuters late Monday.
Then, early Tuesday, Luckin Coffee, which has been engulfed in a scandal, said that it received a delisting notice from Nasdaq.
Let's first go over the scandal.
Back on May 12, Luckin fired its CEO as it attempts to weather multiple probes into allegations that it fabricated more than $300 million in sales last year.
Luckin said CEO Jenny Zhiya Qian, as well as chief operating officer Jian Liu have left the company after its internal investigation "has brought to the attention of the Board evidence that sheds more light on the fabricated transactions" the company detailed in early April.
"In addition to Ms. Qian and Mr. Liu, since the beginning of the Internal Investigation, the company has placed six other employees, who were involved in or had the knowledge of the fabricated transactions, on suspension or leave," Luckin said in a statement.
So, then, on Tuesday, May 19, Luckin said that Nasdaq had sent the company a notice of delisting last week.
“The Listing Qualifications Staff cited two bases for the delisting determination,” Luckin said in a statement.
Those are “public interest concerns as raised by the fabricated transactions disclosed by the company April 2, and the company’s past failure to publicly disclose material information, citing a business model through which the previously disclosed fabricated transactions were executed.”
Luckin said it planned to request a hearing with Nasdaq over the issue and the stock will stay listed until that’s decided.
So, with all of that said, Jim Cramer weighs in on what the change of rules would mean for Nasdaq and why the changes took so long to take place.
Watch More of the Latest Videos on TheStreet and Jim Cramer
- Jim Cramer: $35 'Magic Number' for Oil
- Jim Cramer: J.C. Penney Stock Will Never Come Back
- Jim Cramer: Nike Reopening Stores Is Exciting
- Moderna Rallies, But Here's Why Cramer Doesn't Trust Move Higher