Luckin Coffee Sinks After Short Position Revealed
By Kim Khan
Investing.com - Chinese coffee chain Luckin Coffee (NASDAQ: LK ) plunged midday Friday after a prominent short-seller announced a position in the company.
Shares of Luckin sank 12%.
Muddy Waters Research tweeted that it is short the stock, saying:
“We received unattributed 89-page report alleging $LK is a fraud: ‘number of items per store per day was inflated by at least 69% in 2019 3Q and 88% in 2019 4Q, supported by 11,260 hours of store traffic video’ We view the work as credible.”
Luckin Coffee was already under pressure along with other Chinese stocks as fears about the impact of the coronavirus on growth grew.
But there was a glimmer of good news not long before the Muddy Waters tweet when J.P. Morgan disclosed a passive 6.5% stake, according to Briefing.com.
Shares of Luckin are down 16% year to date, but still up more than 55% in the past year.
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