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Nasdaq Suspends Luckin Coffee Shares From Trading Starting Monday

By Rich Duprey – Jun 26, 2020 at 1:47PM

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It's the end of the line for the scandal-scarred Chinese coffeehouse.

Luckin Coffee (LKNC.Y 0.60%) will no longer be traded on the Nasdaq Stock Market after its close today. 

The scandal-ridden coffee shop decided not to challenge the two delisting notices it received from Nasdaq, meaning the stock will be suspended from trading before the market opens on Monday and shares will be eventually delisted.

Spilled coffee from a sideways cup

Image source: Getty Images.

Get out while you can

It was a quick, ignominious fall for the Starbucks wannabe. A little over a year ago, its IPO saw it debut at the high end of its expected pricing range, and the stock eventually tripled in value, rising to over $51 a share in January.

But the decline came fast after allegations of accounting fraud emerged and subsequent loan defaults by top executives. Luckin has been spiraling down ever since, and though it enjoyed a brief dead cat bounce earlier this week as it prepared to respond to Nasdaq's delisting notices, the coffee shop notified the exchange on Wednesday it was withdrawing its request for the hearing that had been scheduled for yesterday.

While the shares will technically be just suspended Monday morning until all the appeal periods have expired, Luckin Coffee is not putting up a fight, so it's just a formality before the stock is removed.

It's likely, though, the Chinese coffeehouse will trade over the counter on the so-called Pink Sheets after the delisting. Requirements there are much less rigorous, making many such stocks a risky investment.

 

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Luckin Coffee Inc. and Starbucks. The Motley Fool has a disclosure policy.

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