Is Luckin Coffee in the Middle of a Dead Cat Bounce?
Luckin Coffee shares jumped again on Wednesday, after posting an incredible gain on Tuesday. Is there anything behind this move, or is this just a dead cat bounce?
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.
Luckin Coffee Inc. (NASDAQ: LK) shares jumped again on Wednesday, after posting an incredible gain of 50% on Tuesday. Is there anything behind this move, or is this just a dead cat bounce?
Only recently has the Chinese coffee chain resumed trading on the Nasdaq, after being halted on April 7, and Luckin Coffee stock plummeted as a result. However, there are larger concerns with the prospect of delisting from the Nasdaq.
The Nasdaq indicated that its Listing Qualifications Staff is determined to delist the company’s securities from the exchange. Two bases were cited for the determination. First Nasdaq cited public interest concerns as raised by the fabricated transactions disclosed by the company on April 2. Also, the company’s past failure to disclose material information publicly, citing a business model through which the previously disclosed fabricated transactions were executed.
The Chinese company is appealing this decision and plans to request a hearing before the Nasdaq Hearings Panel. Luckin stock will remain listed on the Nasdaq, pending the outcome of the panel’s decision.
[nativounit]
The stock originally took a hit when it was reported that the company had fabricated sales. Chief Executive Officer Jenny Zhiya Qian and Chief Operating Officer Jian Liu were fired after the company conducted an internal investigation.
Now that shares are down about 95% year to date, it appears that some investors are bottom-fishing this stock. Despite the rampant fraud and potential delisting on the table, some investors still see some value in this stock.
Luckin Coffee stock traded up about 16% at $2.46 Wednesday morning, in a 52-week range of $1.33 to $51.38. The consensus price target is $37.73.
[recirclink id=709046][wallst_email_signup]
Contact [email protected] for any questions or corrections.
Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
