Nasdaq has notified Luckin Coffee on May 15 that it plans to delist its American depositary shares from the market, according to a press release from Luckin on Tuesday.
The stock market’s listing qualification staff based their decision on public interest concerns raised by the fabricated transaction scandal and the company’s past failure to publicly disclose critical information, said Luckin, citing a regulatory filing with the US Securities and Exchange Commission (SEC).
The move comes after Luckin (NASDAQ: LK) admitted last month that USD 310 million of its sales were fabricated, as it announced an investigation into the conduct of former chief operating officer Jian Liu, KrASIA reported. The admission quickly sent Luckin’s stocks down 75.57% to USD 6.4 per share.
The company experienced a management shakeup in recent weeks, following the termination of former CEO Jenny Qian Zhiya and COO Liu Jian, and the appointment of Guo Jinyi, previously director and senior vice president of Luckin, as the new acting CEO of the firm.
Read more: Who is Guo Jinyi, Luckin’s new acting CEO?
Luckin added on its press release that it plans to request a timely hearing to remain listed on Nasdaq, which could be scheduled 30 to 45 days after the request.
Nasdaq also announced yesterday that trading in Luckin Coffee is scheduled to resume today, more than one month after the halt on April 7. Luckin’s market capitalization stood at USD 1.1 billion after closing at USD 4.39 on April 6.
“The decision is out of my expectations,” said Luckin’s chairman Lu Zhengyao, adding that results of the investigations have yet to come out, according to 36Kr. In addition to the company’s internal probes, Luckin is under investigation by the SEC and the China Securities Regulatory Commission, separately.
Lu added that he is disappointed and regretful at Nasdaq’s decision, but apologized for the damage done by the scandal.
Luckin’s financial mess has also been affecting Ucar, a company founded by Lu, also the biggest shareholder. The car-hailing firm is seeking to sell its RMB 1 billion (USD 141 million) limited partner interest in private equity firm Centurium Capital’s yuan fund to avoid a cash crunch, as financial institutions and suppliers are demanding payments following the Luckin scandal, Reuters reported on Wednesday, citing people close to the matter.
36Kr is KrASIA’s parent company.