Luckin Coffee (LK) shares collapsed after the company suspended its COO Jian Liu and “several employees reporting to him” for misconduct related to “fabricated transactions.”
The stock opened on Thursday at $4.91, down 81% from Wednesday’s closing price of $26.20.
“The information identified at this preliminary stage of the Internal Investigation indicates that the aggregate sales amount associated with the fabricated transactions from the second quarter of 2019 to the fourth quarter of 2019 amount to around RMB2.2 billion,” the company said in a statement. In U.S. dollars, that amounts to about $310 million.
“Certain costs and expenses were also substantially inflated by fabricated transactions during this period,” the company added.
Luckin Coffee went public in May of 2019, pricing its IPO at $17 a share. In January, the stock reached a high of $51.38 before the coronavirus outbreak forced the company to temporarily close many of its stores in China.
Yahoo Finance reached out to the company for a comment.
Ines covers the US stock market from the floor of the New York Exchange. Follow her on Twitter at @inesreports.
Find live stock market quotes and the latest business and finance news