Starbuck's coffee rival in China has been embroiled in a months-long scandal after it was revealed in April that the company drastically fabricated its sales numbers to make it appear more successful than reality. According to reporting by The Wall Street Journal, Luckin Coffee made up coffee orders—and even fabricated a fake employee—to create the impression its sales in 2019 were double what they actually were.
Now, in the latest development of the saga, Luckin Coffee has received a formal delisting notice from the Nasdaq. Luckin Coffee announced the notice on June 23 after receiving it on June 17.
"The Company has been working diligently to explore possible ways to file the Annual Report as soon as possible,' Luckin said in a filing to the U.S. Securities and Exchange Commission. "However, the Company has not been able to file the Annual Report due to the impact of the delayed financial statement preparation process caused by COVID-19 and the pendency of the previously disclosed internal investigation."
As of June 23, the company’s stock has declined 90% since the scandal was revealed in April.
The coffee chain was founded in 2017 by its current CEO, Qian Zhiya. It quickly grew, opening around 4,500 coffee outlets in China and offering lattes and other drinks at a cheaper price than rival Starbucks (SBUX) - Get Free Report.