Luckin Coffee Fraud Explained

In this video we explain the Luckin Coffee fraud. Luckin Coffee is a Chinese premium coffee chain. It IPOed on the US stock market in 2019 and reached a valuation of $9 billion at the peak. However, it turned out a large portion of their revenue was fake. They were exposed as a fraud in early 2020 and delisted from the NASDAQ.
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#WallStreetMillenial

[@ImpudentInfidel]

A company having an internal investigation and actually concluding they'd done something wrong is what really shocked me.

[@ayyemtee]

It lowers suspicion on anything higher and lowers the fall of distrust to the investors and consumers so if the company can handle a small fall it's better than losing it all

[@seafood_hater]

No doubt it was a very brave move and it pays off in the end.

[@ababababaababbba]

power of communism

[@ChristianWagner888]

They survived the scandal and are now bigger than Starbucks in China.

[@ShaggyRogers1]

@@ayyemtee It also isn't like C-level execs don't get a golden parachute in their contracts in case they get fired. The other dirty secret is that corporate executive hiring doesn't really care about work history. A CEO can run 5 companies into the ground, fired 3 times, and have 10 open sexual harassment lawsuits, but still be hired as a C-level at some other company in a totally different industry.

[@brent7565]

when the founder said "You don't understand our business model" you know you've been scammed

[@garyblack8717]

"Our business model is based on volume, not revenue, that's why we give it away!"

[@paulsz6194]

If you don’t understand it, then don’t buy it. Simple. If they ( Luck in coffee) can’t explain to everyday investors how their business model works, then don’t buy into it! Remember, they have explain in reports how it generates their income for its coffee sales. How do they have an edge over an international incumbent like Starbucks? Starbucks has been in the coffee game for way longer than this dubious upstart..

[@jnewman1718]

When will some Chinese "entrepreneurs" ever learn the truth from their own saying (translated from Chinese): "Paper will never wrap fire", and stop playing with it (fire)! Is the company still around?

[@aaeett1999]

@@jnewman1718 Yea, you can still get one in China. Their americanos actually tastes a little better than Starbucks.

[@ced1106]

Yep. Reminds me when you hear about the stock market, "this time things are different". :D

[@genemartin6962]

A banker once told me that he would never lend money to a company that could not explain HOW it was going to make a profit on a cocktail napkin. Good advice then and good advice today.

[@chibinya]

Its still a successful business, just not as much as they said. Went for a greedy shortcut. Freakin 2500+ stores in under 2 years

[@minimalistic_banhaus]

"I'm going to sell coffee."

[@bunnylove2212]

spot on. the 30 second elevator pitch: critical

[@Mrchengpeng]

现在是6000+@@chibinya

[@StephenGillie]

It's a good test for how well the CEO understands what the company does.

[@stefanwolf8558]

"They do not understand our business model" Dude, you sell brewed coffee. How hard can it be to grasp?

[@shanetonkin2850]

No, you don’t understand. Our business model is different because we use Artificial Intelligence.

[@doords]

@@shanetonkin2850 exactly, add AI to all your business plans.

[@oliver9980]

@@doords 🤣🤣正确的

[@tedchou12]

we brew coffee using AI. Its suppose to taste 10 times better with 1/10 the cost. our stock price is thus undervalued

[@sebastiansperception]

Actually, it can be pretty complex... all big coffee chains are about everything except coffee... nobody goes to big chains for coffee. They go for many reasons, mainly ethical-aesthetic reasons, and ideology. If anyone wants coffee for real, they go to a small place, where there's a serious barista, who knows what he/she is doing, and it's not a 21 y.o. child who made a 2 months course... And only in small coffee bars, one can get the good stuff. But in China, where coffee is only popular in very few places, selling it is not that easy at all. And this company seems to be doing pretty well... So, trust me, it's not about coffee. Not at all. Same with Starbucks... and consider this: 70% or more of what people actually order, is just milk and sugar (a freaking bad joke, not a coffee). And one of the worst coffees you can try is the one from Starbucks... awful quality, and mostly clueless "baristas"... and yet people are willing to pay 5-6 USD for a F... latter there... Whilst a perfect cappuccino (the way it should be prepared, the way only Italians seem to know) in a simple place, RIGHT IN FRONT OF THE COLOSSEUM, costs 1,5 euro or 2... Talking about investment...? imagine, how much must it cost to have a place in front of the Colosseum, in Rome? ... So, what coffee?

[@RUSure-jm9rp]

The CEO’s were fired but not held accountable. They were given the opportunity to sell their stock before the results of the audit came out and simply moved on down the road. It doesn’t matter where you gamble; Las Vegas or New York, the house always wins.

[@adkrgrc6786]

I believe thats only possible in China, I don't think you can do that in the USA.

[@Chrinik]

@@adkrgrc6786 You'd be wrong...alot of highly criminal CEOs simply quit with a large bonus payout before any fallout from their action hits them, and even if they get tried and found guilty, usually the company (since companies are people) gets the hit, not them. And even if it hits them directly (such as when the company sues them), it's usually a fine or a settlement, something they just pay off and be done with.

[@ILOVEDEFENDINGTHE1PERCENT]

@@adkrgrc6786 Who did you think the Chinese learn from lmaooooo. All tried and true malicious practices comes from Wall Street.

[@cbrrebates]

The former CEO actually lost everything. He is not even allowed to travel by air or stay in a star hotel.

[@Hellingame]

The CEO was actually fined to hell by the CCP regulatory board, and last we heard was essentially under house arrest, with most of his travel and hospitality privileges revoked.

[@augustoluna5577]

I've tried their coffee. It was impressive, they manage themselves to make worse coffee than Starbucks

[@tumbalo71]

WTF ??🤔

[@johnsoncao3114]

Not agree, somehow it’s the same level. What do u expect for half or even cheaper the price?

[@veganpotterthevegan]

@@johnsoncao3114 I've never had their coffee. But roasting is a huge part of what makes coffee good or bad. Starbucks burns their beans. It doesn't cost very much extra energy for them to burn their coffee. And a lot of their money goes to advertising

[@johnsoncao3114]

@@veganpotterthevegan Coffee making isn’t a 3nm chip, I do grab a coffee nearby when traveling. We have Gloria Jeans and Esquires and Tim’s and this long time Starbucks here. Scientifically or emotionally, aren’t so much difference. Luckin is definitely a coffee at the list.

[@bpurkapi]

Starbucks has notoriously over roasted coffee. The appeal is that at this point Starbucks could provide consistent over roasted coffee, be friendly to new drinkers of over mixed coffee with relatively better customer experience and options to venture outside of coffee. Luckin was attempting to do: over roasted coffee, appealing design of café, and aggressive expansions. One of these businesses began as local peddler and systemically understood its market, becoming more than coffee. The other was attempting to follow an MBA playbook of operating a business based on text book success of other businesses. So Luckin is a copy cat that isn't doing enough to innovate, other than its recent groundbreaking fraud. Anyways, starbucks is not great but has relatively better customer experience. Customers are not judged as they would be by better coffee places. Starbucks are happy to collect decent money on beverages that are not true to tradition. Starbucks makes coffee accessible. It doesn't educate its customers and charges a premium over other fast casual establishments.

[@Katsuya89]

I remember I almost bought stock in this company back in 2019 bc The Montley Fool was recommending it. I ended up buying Dunkin Donuts and Starbucks stock instead. I'm so glad I did lol.

[@drippinwet774]

Just checked their current stock price after making that comment. Education is a fantastic investment.

[@GCKteamKrispy]

Lol, so lucky 😂

[@christiansteen9226]

The Motley Fool is responsible for making many many bagholders

[@ScribblebytesWorldwide]

Well...I wouldn't take advice from someone who "fool" in their name so good for you.

[@ScribblebytesWorldwide]

@@christiansteen9226 Good. A fool and his money are soon parted.

[@mfaass]

The CEO and COO obviously executed their plan based on the thinking that overseas investors would never know the true situation on the ground. Anyone living in China and visiting any Luckin in any city would have knonw almost immediately that the foot traffic was next to nothing, while anyone caring to saunter over to a Starbucks would see that it's almost impossible to get a seat during peak hours.

[@jasonjin5253]

Mike are u a moron luckin actually sell huge volume in china lol

[@Doodums]

@@jasonjin5253 was vs is Luckin is doing great these days

[@gold9994]

@@jasonjin5253 Not even close to heytea.

[@jasonjin5253]

@@gold9994 true ;D but luckin isn’t bad heytea much better

[@Dwightstjohn-fo8ki]

We have lots of seedstock companies with some pretty innovative ideas in BC's speculative stock exchange. BUT when your housing "innovation" is based down some gravel road in the interior of Peru or Columbia or Argentina when it's obvious market is an industrial country I get a little shaky.

[@haebee]

if they can't explain their business model to a sixth grader, they're scamming you.

[@bryce.ferenczi]

Well, buisness model was to sell coffee like anyone else, and their sustainable competitive advantage was to use "AI" (modern data analytics) to reduce cost per unit, but I'm sure Starbucks is doing that as well anyway.

[@wrednax8594]

Very true

[@cbrrebates]

Can you explain Microsofts business?

[@cbrrebates]

@@bryce.ferenczi not really. Their coffee has to be ordered using app. They know each of their customer. Starbucks are way behind.

[@laipengwong4701]

@@bryce.ferenczi l

[@williamdavies2375]

The people who made the anonymous report were the top brass of the company who had privately short sold stock. They made hundreds of millions

[@ahhchoo8488]

I remember their Chinese citizens were laughing at the American investors for funding them free coffee. They were right.

[@bercaferca4554]

lol

[@Mrchengpeng]

也许你应该目光长远一点今天你还会说这样的话吗目前瑞欣门店超过6000+

[@harryhan2525]

@@Mrchengpeng门店数量超过星巴克了已经 但是我感觉他家咖啡太甜 我不中意饮

[@Mrchengpeng]

@@harryhan2525 你可喝加浓美式，不加糖

[@ihatenfts501]

@@harryhan2525中式星巴克，咖啡是不好喝的但是特飲挺好喝😂

[@lorenzo575]

I live in China and I can honestly say that they were sketch from when they opened. They were giving huge discounts and even offering free coffee. Even now it’s my go to coffee shop. Coffee is only 2 dollars sometimes even $1.40 if you’re vip member. It’s great for basic black coffee

[@harryhan2525]

喝全家吧 全家一杯拿铁到手才7块

[@MontageHustle]

Its crazy that they didn't even NEED to lie.

[@marcusanthony9322]

They were created by the CCP, it was made to lie

[@kevinchen5703]

@@marcusanthony9322 fools believe in lies.

[@Dfthg-bz3hp]

@@kevinchen5703 Only fools believe in the CCP

[@kevinchen5703]

@@Dfthg-bz3hp Well you believe they are bad. So you the fool?

[@kevinchen5703]

@@Dfthg-bz3hp I don't think the Chinese need you to believe in them. You believe in Trump or Biden?

[@rave400v6]

I'd stay far away from Chinese stocks no matter how good it might look.

[@icost4671]

Smart idea !

[@mohit4902]

I don't want to be racist or sexist, but I've seen that everything Asian women make is mostly fraudulent, or has cooked books - Forever 21, Luckin Coffee, Coffee meets Bagel, etc. As a rule, I never investing anything Asian women build. This is just a correlation I see. Atleast Ali Baba went down because of their stupid government and not because their CEO was incompetent. I bet most of the Asian women are used to their government funding them in their home country :/

[@carinadominguez22]

@@mohit4902 Woah there. Cool it with the anti-semitic remarks.

[@tliew3846]

Geez - like Americans are any better. Enron, Theranos, Quest Communication, World Comm, Bernard Madoff. Wasn't even trying and I can name some of the biggest American wallstreet scam in the recent past, not even mentioning the housing bubble and the crash that followed: Bear Stern, Lehman Bros, Washington Mutual, CIT Group, Fannie Mae, Freddy Mac. LOL - even Chrysler and GM and GE crashed wiping out billions and killing millions of retirement dreams.

[@txman276]

The Chinese certainly do. That’s why their real estate is so sky high.

[@LumpySangsu]

I love how Luckin became a staple of patriotism for some Chinese because it defrauded foreign investors lmao

[@operator2855]

Of course you commies enjoy that.

[@Is2RoxasSora]

It really isn't 😆 people would care less about a coffee shop. More like the trolls who want people to believe in it.

[@ax3226]

@@Is2RoxasSora what you on

[@_HMCB_]

This 🤌🏽

[@carlahlers9454]

Excellent chronological report. I knew the story vaguely, but now I know the details thanks to you.

[@F90M5]

When Citron goes long, you know its a fraud! Lol

[@stringbeanh2o819]

Bro, don’t text that bot

[@javajav3004]

😂

[@danb1618]

@Disney Suck Rhino Dixs Judging by your profile name I’d say you’re not a fan of Disney

[@drippinwet774]

YES! We called their BS About 2 years ago, during one of my first business analysis research projects; our group uncovered red flags from business decisions they made. We found it a little suspicious that we rarely hear about or see Luckin Coffee product/services in our Southern California Asian community areas of the city moving to release an IPO. Not like they'd have a ghost of a chance against Starbucks, Dunkin, & McDonald's anyway. They'd still have to fight Ten Ren's, Lollicup, & Tastea for any moves on American soil.

[@Kaloyan.Dimitrov]

This was the first stock I have ever bought for 500$ and it almost made me quit investing instantly but at the same time motivated me to start reading in-depth analysis, books like "The intelligent investor" and become a value investor instead of just buying hype companies. 500$ is not a lot but for a 21 years old it is. However I am happy that this happened because it taught me an important lesson.

[@bercaferca4554]

Daamn lol 🤣

[@user-eg8te1ed4q]

Ты русский?

[@warrengardner]

I think it's something all investors have to go through. For me it was Cisco and JDS Uniphase. I got burned, and it motivated me to learn about investing.

[@deebil8099]

$500!!! You should get a team of lawyers and sue them.

[@mazariej11]

That's a great lesson to learn early & glad it didn't make you quit, you did the right thing and got better after a bad time

[@EventHoriXZ0n]

I love how doing business in the 21st is essentially becoming a blitz scaled Ponzi scheme with a little inventory on hand, operate at a massive profit loss, and then hope in 15+ years you can somehow turn your business profitable so you can pay back debts.

[@davidlee883]

Interestingly luckin coffe has recovered 70% of its ipo price in pink sheet market

[@jwmc41]

Yes, and you have to wonder what is keeping Nikola afloat!

[@Doodums]

LKNCY relisting baby. it's gonna happen. less than a dollar from IPO price of $17.

[@AlexTenThousand]

It's quite ironic that they used a deer as their logo, a symbol of longevity and prosperity in Chinese culture.

[@allansh828]

It’s not. Deer isn’t a common animal in China

[@MrPaxio]

ah the deer, Americas favorite road kill

[@AlexTenThousand]

@@allansh828 It is. Shouxing, the deification of Canopus, is always portrayed as accompanied by a deer, symbol of longevity.

[@ThePr0Br0]

@@allansh828 china is not a fuckin island, of course it has deers, i even saw wild ones barging into the city once

[@allansh828]

@@AlexTenThousand Being Shouxing’s ride isn’t the same as Shouxing himself.

[@vn88ttt]

Institutional investors: invested hundreds of millions in Luckin = smart money Retail investors: invested a few thousands in short squeeze = dumb money

[@thawdani]

Institutional investors: invested hundreds of millions in Luckin = -99% Retail investors: invested a few thousands in short squeeze = +400% u seem to be forgetting the facts

[@zorth4729]

@@thawdani he's being sarcastic

[@tomlxyz]

There's one thing many get wrong about investing: Having made the right bet doesn't mean it was a smart bet and being wrong doesn't make it a stupid bet. The lottery winner didn't invest smart, an institution isn't dumb when one investment fails if most are profitable. But many people seem to have their attention on the short terms and results and don't look if the decision were made on rational reasons

[@thawdani]

@@tomlxyz its about the profit, in the end of the bloody day. doesnt matter whos smart/right/wrong/ whatever the fcuk

[@vn88ttt]

​@@tomlxyz you're right. Institutions bought lottery tickets with a lot of convictions, got it. You need to be smart to buy into scams like Luckin or Wework in the first place.

[@julesfisher3551]

Personally, I believe if you are listing on an exchange your HQ should be based in that jurisdiction and your corporate officers based in that jurisdiction. Then the relevant agencies associated with listing in that jurisdiction can hold the company and its officers to account. However remote listing is just a mechanism to syphon capital from one jurisdiction to another with responsibility avoidance.

[@BChandl13]

I wonder damn near every day why any country on this planet allows China, whether it Chinese enterprises or the CCP play ball in the global equites or bond markets. The world needs to step up and hold these idiots to account one day, with an economic wrecking ball.

[@annwilliams6438]

Excellent idea and comment. Thank you.

[@sli4458]

In mega Chinese cities, Luckin had scattered stores, especially in Central Business Areas, in office building lobby. ppl was given free coffees once they installed apps. But everyone went to Starbucks, no one goes to Luckin, normally 2 or 3 in a store.

[@highandmightyqueen79]

Why is the coffee bad?

[@kevinkertarahardja1836]

@@highandmightyqueen79 kind of normal, same as starbucks i guess. but cheaper for sure.

[@gladitsnotme]

@@highandmightyqueen79 it wasn't, Chinese people just like foreign brands lol

[@wendyshoowaiching4161]

I love luckin

[@harryhan2525]

I think people still believe Starbucks is classier They are not there for the coffee itself, they are meeting people they don’t want to let down? Who would meet clients in a McDonald’s?

[@jameslai322]

It’s highly suspicious a new entrant can take on Starbucks within 3 years! Common sense !

[@Akelehimarenge]

Yes this is suspicious as Indian coffee chain the Cafe Coffee Day chain, consisting of over 1,600 outlets in 219 cities, was valued at $1.5 billion. It took the 12 years to achieve that no in 2019🤯

[@CutHardstylez]

obviously sponsored by the government

[@elvism684]

@@CutHardstylez Just like Nio.

[@parnamsaini4751]

Conmen

[@jont2576]

@@Akelehimarenge cuppocinos and lattes is not popular in India.thry only drink chai tea and eat pratha naan and curry.

[@englishguy215]

Here in China there are three Luckin outlets near to me. These are all small outlets and none of them ever look really busy, even the one in a prestigious high end mall.

[@parnamsaini4751]

@Daddy1724 Copy Cut Paste

[@habibbialikafe339]

When luckin coffee crashed, I bought in between $2-4. Now it's over $9. Good investment

[@maryyu4010]

Me too :) figured it had to rebound after that drop

[@habibbialikafe339]

@@maryyu4010 when it initially dropped from $25 to $6 in a day, a hedge fund poured in billions. then when it dropped to $2, they lost so much that they had redemptions and had to close the fund haha. dangerous just buying the dip. i bought because i valued the company after taking out the 700mil in fake revenue, and found it was at a cheap valuation compared to starbucks, which obvioulsy has less room for growth by comparison. Did you do any analysis or just buy the dip?

[@maryyu4010]

@@habibbialikafe339 admittedly I just bought on the dip - not a lot, certainly just a drop in the bucket of my portfolio, but thought ,why not take a chance 😀

[@habibbialikafe339]

@@maryyu4010 good luck! you will need it playing the luck game haha

[@randomz1267]

Good job habibi

[@Bijlxmsth]

They initially duped Chinese then went overseas. The unnecessary expanding of their store despite people not buying as much was already a red flag.

[@jasonjin5253]

Lol uh moron u do know that luckin is still operational and they have huge sells in China to this day

[@nikhilsrl]

@@jasonjin5253 Are you a Luckin paid troll? You are all over this comments section.

[@GENREBENDER-]

@@nikhilsrl And it looks like China knew exactly what they were doing.

[@_HMCB_]

I find it hard to believe that they operated with impunity in China without the government knowing. Going overseas, in my opinion, could have been part of a plan to sucker investors with underlying motives by the Chinese government. One thing we know is that China is busy worldwide looking for vulnerabilities.

[@AyyGin]

Basically just inverse whatever Citron does lol

[@mrgreenmooshroom8651]

Citron: Buys a stock *buzz* *buzz* Bogdanoff: Dumpit

[@Scri1470]

Bogdanoff: Yesss? Guy on phone: He diddit. Bogdanoff: Diddhe buy? Guy on phone: Yesss. Hewent ool in. Bogdanoff: Dûmpít!

[@parthsharma7091]

@@mariasofia3994 who are you? Owner of this yt ?

[@teslabullsingapore8656]

I've stopped touching any US listed Chinese company after seeing government's action on Alibaba, political risk too hard to predict.

[@vasiovasio]

Yes, how they silenced the CEO and dor weeks nobody know what happened to him...

[@Stoneface_]

And now DIDI smh

[@davidhynes]

Evergrande $300,000,000,000 USD billion in debt?

[@chrisrobinson4595]

The PBAOC does not audit any companies. It sets the rules that public accounting firms must follow when conducting audits. China has their own government agency that writes the auditing standards as does Europe.

[@jasonq4816]

Yup, also it's PCAOB... The accountant part me is screaming that.

[@broccolifan6971]

2:30 This company's new slogan "freshly toasted. freshly grounded."

[@happyeastwood]

Hahah. Nice one!

[@mjp9672]

😂😂

[@mjp9672]

They literally got grounded 😂

[@AyratHungryStudent]

Considering the price movement, the company was actually doing amazing all these years. The CEO and COO just exaggerated the success. But the company has been doing very well despite all the drama. Most investors misunderstood the gravity of the situation. A company with this much negativity wouldn't be able to continue its operations and have its price 30x in 3 years if it were a fraud.

[@riteshvs4949]

What is otcpk

[@fksons4161]

I am always amused when these Investment Bankers who have never opened a business arrogantly think a young company can just grow like speed of light. These so-called Investment Bankers are as good as someone with a high school certificate. Arrogance and hubris is their hallmark

[@allblacks4729]

its pretty easy when you are gambling with company money, no brainer,

[@bgates275]

Does matter whether the businesses succeed or fail. The middle men bankers have mitigated all the risk by financing with other people's money, but still sharing in the profits by just taking their share from the spread in the interest.

[@fksons4161]

@@bgates275 But that's no risk mitigation. That is pure gambling. Most of the PE Firms to me are gamblers. Most especially Soft Bank. I don't just understand how these Institutional Investors are stupidly pumping money into these walking corpses of a Fund Manager. They never learn from past experience. Sane thing happened to Abraj Capital just few years ago and they can't change their ways

[@Dwightstjohn-fo8ki]

Nevertheless, we've allowed the centralization of MONEY: you go to New York or London on their terms or you go home. In 5 days when the USA credit crunch hit ALL our concrete high-rise project stopped for eight months while we looked for other financing, AND even the Olympic venues for the 2010 Winter Olympics in Vancouver slowed down, and almost didn't get done in time. I built the waterfront housing unit, and the Squamish Hospital reno. just in time for the Games.

[@femshep4445]

that's nice to see how they survived 97% fall in stock market and now continue inreasing number of stores and finally gaining profit

[@jackie2951]

Two things obviously happened here for sure: 1. LK fooled the investors 2. The coffee they served was better than Starbucks.

[@JamOscuro]

I don't think the coffee was better than Starbucks. But it was certainly much cheaper, if you used their promotions, which everyone did. Luckin was super popular in Beijing because of their aggressive marketing, constant promotions and free delivery. The Chinese millennials were hooked. Me, too.

[@AvoidTheCadaver]

Being better than Starbucks isn't exactly a high bar. Although to be fair, the roastery in Seattle does pretty decent small batch roasts. It's their mass produced stuff that is pretty rubbish

[@kemsleymtutuzelidube5094]

A great report by MuddyWatersResearch and you. Keep it up!

[@perfectstudents8361]

The company's logo with a deer's head looks pretty nice.

[@Robin_Starsfall]

I'd buy coffee that came in a cup with that on it.

[@broccolifan6971]

If you look at again with imagination, you'll see middle fingers all over.

[@broccolifan6971]

Also, the background behind the deer is a tiger biting the neck of the deer.

[@perfectstudents8361]

@@broccolifan6971 I guess you are imagining too much. Seriously, for the logo design perspective, this Luckin Coffee's logo is much better than the complicated Starbucks' logo.

[@robertgiles9124]

yeah, because a Deer with antlers....really says coffee so clearly. Are U Nuts? The idiots here must think coffee comes from Deer.

[@clayprice924]

My first investment was luckin. I did a lot of research and they seemed like the Starbucks of China. Not a fun year for me

[@texan-american200]

When they baldface lie, no amount of research will help. Word of thumb: If it involves communist China, don't invest with them... It saves from so much heartache.

[@kroto7451]

@@texan-american200 truest thing I've read on KZbin in a while

[@braddombrosky4963]

Amen. If anyone still has Chinese investments, GTFO asap

[@strigoiu13]

@@texan-american200 yeah just invest in a true american company like enron :))

[@texan-american200]

@@strigoiu13 Wow... Are you out of touch and behind the times... Enron was dismantled decades ago, yet the bandit communist Chicoms keep operating in Wall Street everyday. Do you have any more snippets of smartazz witticism?

[@wanderingtrades]

Got out at $24 a couple of months before the scandal. Would have been a big set back while in college. 🙏🏾🙏🏾

[@Beeman2892]

How many shares did you buy?good timing 🔥🔥🔥

[@laowai2000]

Missed a bullet there!

[@wanderingtrades]

@@Beeman2892 It was so long ago, It was most likely low 4 digits

[@johnnyrobinson8168]

Great job giving the facts!

[@samueltan4814]

It is the New York Exchange responsibility to ensure all listed and IPO companies are properly audited and accounted for to protect the ordinary shareholders from being cheated. If the Exchange just accept any Tom, Dick and Harry companies to be listed, such incident will never be the last!

[@1SuperTempest]

Chinese companies hid their books under the guise of national security and the nasdaq allowed it. The recent overhaul was meant to address this very issue and chinese IPO's will have to allow access to their banks in the same way US firms do.

[@nedergubis2638]

Not.

[@class6aa]

The fact these company decides to chose NASDAQ is because they are the most relaxed on auditing.

[@padraicley3265]

The Exchange earns millions along with the brokerage firm and/for the favorite customer. They overlook things. It's their interest to make money thru IPO. There is a conflict of interest.

[@ced1106]

I'd rather require investors know WTF they're investing in, but that'll never happen.

[@ninh05]

They call it “flexible accounting.”

[@allansh828]

Luckin Coffee is like the Stonk in Chinese people’s eye. It’s an example of the people (having large percentage discounts of coffee) ripping off Wall Street.

[@euclideanspace2573]

I can confirm that, many people I know were cheering their fraudulent behaviour on which stems from a very recent "them vs us" tribalism bullshit, it has been getting worse since the virus and Trump calling it "The Chinese Virus" definitely assisted the rise of more tribalism. This just left me miffed. So they did an internal audit, came out and was like "yeah guys, we fucked up, CEO and COO are now fired, the 88% (number of fortune!!) was more or less correct, shit", that's... surprising. I'd expect these big companies to put up the illusion and since it's a Chinese one, they'd play on tribalism to weaponise their nationalistic pride (cough Huawei). A nice breath of honesty. The morale here is simple, be worried when Shitron supports you!

[@dongster529]

The recent new wave of expensive money losing companies is hardly new by now, with the tons of famous examples from Uber to Wework, you can trace the crazy to when softbank started the vision fund.

[@allansh828]

@@euclideanspace2573 it's all relative. They've seen so many fraudulent companies ripping off people's savings. At least Luckin has been faithful to consumers.

[@euclideanspace2573]

@@allansh828 Yeah, I'll give them points for being honest and taking immediate action, that's how audits should be performed internally. It's a rare sight to see in any questionable company, let alone Chinese ones. One comes to mind... Theranos.

[@suny0818]

To be honest, I wouldn't call it "premium coffee". It's just "coffee".

[@johnsoncao3114]

Yes, quick mobile chain stores for easy grab.

[@mikedok1]

Man!! That was as interesting. I remember when I trade LK. I also remember very well when it crashed.

[@Fate025]

2 years later and luckin coffee still has more than 10 stores in Singapore..... Company's still alive and kicking i guess......

[@Paul-iu1om]

It’s the times , the times of deceiving and more will happen

[@stephenc2481]

Of all companies out there, I am not desperate for investment in Chinese companies.

[@SportsIncorporated]

I think you should have mentioned what exactly you own when you purchase shares in a Chinese company.

[@lowify1]

I was drinking Luckin coffee in China during my travel there. I didn't know about this drama before having Luckin coffee. I ordered 3 - 4 times of their coffee during that period. Their pricing is cheaper than Starbucks. I find there coffee to be a less punchier in aroma and a little flat in taste (Disclaimer: I have been drinking robusta beans espresso for a few years. Kinda expected). However, I will still order from them because it is cheaper and easier to order through their App. I do agree that ppl misunderstood their business model. It is definitely different from Starbucks in which Starbucks sells the lifestyle. Luckin coffee is fighting for the quick, grab and go model of caffeine fix. You are never there to sit down, drink and chat about the day in their outlets (I don't even see any good sitting area where Luckin coffee operates.)

[@jerolvilladolid]

When luckin coffee’s stock tanked to practically worthless, that is an excellent opportunity to buy the stock. Why? Because stocks are legal ownerships of a company. If Luckin still had 2,000 physical stores, they will not close down. A retail business with brick and mortar locations is different from a purely financial enterprise like lehman brothers, or a true ponzi scheme like Enron. Luckin will never be allowed in the US stock markets again. But you can quadruple your money if you bought it early at the OTC markets

[@Inkling777]

I suspect almost of those 2,000 stores were rented property rather than owned. When the rent is not paid, someone else will move it.

[@humhuminsert5905]

They are already restructuring and want to relist. So there is a good chance they will be allowed again

[@humhuminsert5905]

Stock moved from 2$ to 16$ for a reason

[@MultiMyNickName]

Luckin has a lot more than 2000 stores. Its a HUGE brand here in China and probably the biggest seller of all the coffee stores in China currently.

[@glennt1962]

They had the right intentions which were typically to make money. By using an aggressive marketing campaign convinced investors however revenue didn't match expenses and the old adage "Fake it until you make it" doesn't always work.

[@countdowntorevolution9986]

well "fake it until you make it" is about attitude, not cooking the books.

[@xtreame]

They are here in singapore opening everywhere

[@abujamunafik7941]

Ikr crazy

[@andyhung424able]

PCAOB (Public Company Accounting Oversight Board), not PBAOC.

[@didalouchui2154]

Same thing happen to the Chinese FUQI jewelry store in China that list in US stock market that went bankrupt during the last financial crisis.

[@adamriese3610]

The growth of their stores is unreal 🙃

[@kailexx1962]

@5:20 Andrew Left is a typical "thumb-on-the-scale" short seller. He usually issues a "report" questioning a business' practices just when their stock is soaring, thereby causing it to fall and he rakes in the cash. In this situation, he was long on the coffee stock and tried to keep other people's money in the game by issuing false assurances while he got out. The NFA (National Futures Assoc.) has sanctioned him for false and misleading claims. He was also banned for 5 years by a Hong Kong regulatory tribunal for false/misleading claims. He's basically all the worst aspects of Wall Street investing personified.

[@oleung330]

To be fair, the Hong Kong ban aged incredibly poorly; like a good ol' fine glass of milk.

[@kristofp72]

Andrew Left should be in jail. He's nothing but a crook.

[@3rdalbum]

I saw the shops on a recent trip to South-East Asia but fortunately I was rarely in the mood for coffee.

[@Jocky8807]

In between the ipo and the bancruptcy, luckin coffee: right issue, issue bond, sell founder shares, and preferred shares. Nicely done.....🙏

[@thepilgrim1581]

And the CEO and COO got away with millions and millions of dollars. Happy days.

[@kerry9125]

"If only they used their talents for good things, instead of evil." -Chief of Control

[@NaYawkr]

Make sure you invest heavily in The Three Gorges Dam, the biggest Dam in the world. What could go wrong ? ? ?

[@neomonk]

Fast forward 3 years, Luckin now has 10,000+ stores in China.

[@gabrielleblanc353]

Andrew Left. Just do the opposite he does and you'll be rich

[@germsage6726]

That will be Andrew Right.

[@polycadence8482]

Luckin Coffee founded by Taiwanese in China learnt from the finest on Wall st., Enron, MCI Worldcomm, Adelphia, Boeing, Theranos, AIG, Washington Mutual, etc etc. Next up Nikola Motors, Lordstown Motors, Clover Health, and 400 other SPACs.

[@wilkinlow]

Gotta learn from the best

[@Doxansq]

Fundamentally it might be a good company in the long run and they might overcome this dissaster, hence investors buy especially at these cheap prices In the end your up around 800% . In the end it seems that a couple of people were responsible for this. It all depends if they really succeed in overcoming this situation

[@chaitanyankc]

i sold many stocks of it for 2 dollars before delisted. 2 stocks of mine still left and is now around 37. very bad decision i made

[@stc2828]

The biggest joke is the company is profitable now and the value already recovered 😂. Shareholders made massive profits from delisting

[@chaitanyankc]

@@stc2828 yes you are true

[@Phyx1u5]

moral of the story: if ur gonna commit financial crime then commit financial crime on an epic scale and make sure to pay off whoever you need to, otherwise you WILL face the wrath of the "law"

[@theviceroyofreality7073]

Moral of the story: 40 years after the US oligarchs have allowed the US to be raped by China, they've now finally realized they were being ripped off. But Joe Biden, the Manchurian candidate is in office. So expect nothing concrete to happen save news coverage of the rape.

[@SirHC888]

Because Lk actually came to terms with their own audit. Someone in that company has a soul.

[@azbycxbyaz]

I visited this chain. It was never quite busy. But had great discounts

[@terrystephens1102]

Great presentation thanks.

[@FabioTheGreat]

*We are using Artificial Intelligence When you hear those words, run 🏃.

[@ZebraFacts]

This past March, I purchased $50 worth of this stock just to see where it would go. Today, that $50 is up to $117.74.

[@tomahawk1556]

Dishonesty & Greed >>> Lethal Combination indeed!

[@Adrian_Nel]

The stock could rally despite the bad news because the 'product' isn't coffee, it is the hipness-factor.

[@theartofbiz]

3 years since the fraud, Luckin has actually made a miraculous comeback, posting full year operating and net profits for 2022. They've not only survived the scandal, but are actually in a superb position to continue growing. I made a video explaining how they were able to achieve this, this is an extremely interesting case study.

[@Danny-qh4su]

Cool

[@gaerekxenos]

Doesn't seem that surprising in all honesty. The only thing they needed was to grab customers, which the mad rush of people cashing out their coupons (and them managing to fulfill those presumably) would have helped reinforce a habit for potential future stability if the store would still manage to stand - and there were other potential reasons for customers wanting to swarm in aside from just the coupons. Not to mention all of the things with Covid and ordering online to grab the drinks and leave is now a more standard model for ordering drinks. The fraud scandal being exposed just helped reset the valuation to what was appropriate, and them managing to survive the bankruptcy was the only thing that was actually needed after managing to get people to develop a habit (difficult, but probably not the worst when you have so much built up already as a base) Even the whole cashing out of coupons probably wasn't necessarily a net negative -- people do tend to make other purchases while they are at it, such as for friends/co-workers while they are there. And there is no mention of what those coupon conditions were, so there could have been some other blurb such as "need to buy another item in order to redeem the free drink" so they'd actually make a profit of some sort (or at least hit neutral rather than be stuck in a net negative). Someone can probably prove otherwise on what coupon terms and conditions were though, since I don't know anything on what was actually on there. But many places do have terms like that in regards to coupons, such as Starbucks having a coupon that was given out in the morning for free coffee that could only be redeemed in the afternoon when there are people who cannot have coffee that late in the day

[@1507421]

The PCAOB does not "audit" anyone. They are a regulatory board that sets certain "audit requirements" and reporting requirements that apply to companies on the US stock exchanges. The audits are done by the large accounting firms. The OCAOB was created as a result of the Enron fraudulent financial statements after that company went bankrupt in a few months,

[@hukmai]

Damn I remember looking at this company back around 2018, something didn't look right as it looked too good to be true while the cannabis bubble inflated

[@MrKenski12]

So did the CEO and COO got jailed for this or are on an unknown island with no extradition treaty cashing in on the money from investors and having a good life?

[@TomCelar]

Wonder where my leveraged DiDi long goes (made profit on IPO) and now bought in at $11 to see whether itd another fraud or bounce back to $17 :)

[@weiSane]

I got out ..I will never invest in Chinese companies.

[@texan-american200]

Look up when the CCP gets involved with investing in the US.

[@exposedthat]

It is 8 a share now

[@tylerkelley4403]

Thanks for the video

[@garrettjoe4475]

Sometimes i wonder how people get rich at these days.

[@dylanphillips2688]

But people don't believe it's true anyone can make money from home online because of the high rates of scams in the business.

[@cooperjordan4695]

Yes that's true

[@myersharold3989]

Knowledge is the greatest commodity investment is the quickest path to financial freedom, the rich stays rich by spending like the poor yet investing! While the poor stays poor by spending like the rich yet not investing.

[@olsonharold8048]

Nice one

[@panama-canada]

OTC markets speculation can cause prices to fluctuate with little reason besides speculation.

[@rexnex277]

This was a pretty standard business model for many chinese companies and still is today.

[@sandesh9240]

Why only China, even India and many so called developing countries..Rogues creat rogue entities to launder the dirty money of their political bosses...

[@svalbard01]

I bought this stock a couple months ago. Doing pretty good so far.

[@thatdawg2021]

i made like $100 dollars off a trade when this came out, so glad i didnt stick around lol

[@7425park]

In the USA, an internal report would never produce an incriminating result. Neither would a 3rd party big Accounting report.

[@nicholaslake5937]

I bought some after it crashed, figured about the same as LEAPS. Sold 1/3 to cover initial investment will let rest ride and sell another 1/3 if we get into the $20s. Gotta take some risks if you want ten-baggers within a short horizon.

[@kevoreilly6557]

Stock now over $35

[@zoe1882]

Most of the asshats watching this video don't know how to look at a stock price.

[@foxbox2879]

That's a really nice logo and store design.

[@rodrigobelinchon2982]

I was waiting for this .

[@mauricioweber8879]

Interesting and quite complete.. for us lay,en at least

[@VatchGaming]

It was Starbucks who did the backdoor investigation.

[@TomCelar]

Lol, Citron got it wrong again :)

[@jaredchin5772]

it's year 2024 and there are still new Luckin shop popping up every other month with good business. Still receiving discount coupons everyday which allows me to get a cup of delicious coffee for 1.5USD daily. From a consumer stand point, I'd say Luckin is pretty good, financially idk.

[@sidharthk_]

Please make a video on trusted news sites to use for investing and trade ideas.

[@sidharthk_]

@Pînned by Wall Street Millennial Is it possible if I can invest $10,000?

[@BillHawkins0318]

This just shows people have grown so tired of Starbucks they are willing to put up with a fairytale rather than drink one more venti latte. "Just give me the big one dang it!" In fact, the word venti means 20 in Italian

[@thomasshipley4516]

You know it’s a 20 oz cup right? Don’t get me wrong I have been boycotting Starbucks for 7 years now.

[@mikeshoults4155]

How did it taste? The marketing was good.

[@dperreno]

I was living in Beijing in 2019 and I was wondering how Luckin Coffee was so prevalent. Their coffee was good, but it cost half of what you would pay at Starbucks, and there weren't all that many customers considering how fancy the stores were. I couldn't see how they could stay in business. Most shops in China are very crowded, so they really do make it up on volume, but not these coffee shops.

[@simpletongeek]

I'm surprised they sell coffee. Wouldn't tea makes more sense?

[@dperreno]

@@simpletongeek You may be thinking of Hong Kong. Mainland China is not at all oriented towards British tastes, the consumers there are very into Western brand names, whether from the US or Europe, so you see a lot of US food chains and European luxury goods, including cars. It seemed to me that half of the cars in Beijing are VWs ("affordable cars") and the other half are Jaguar, Porsche, Audi, Mercedes, BMW, Masarati, etc. Quite a few Jeeps as well. You have to go to the smaller cities to see many Chinese brands.

[@kofiamankwa9258]

Great video. Subbed.

[@wallstreetmillennial]

Thanks for the sub!

[@Beeman2892]

Can i make money by waiting for such companies like this to pop up again,then buy it then let it go up then once i hit my target sell it?

[@mattm5132]

Absolutely