January 13, 2021
Getting only a slap on the wrist from regulators, some may think its safe to dive into
Luckin Coffee (OTCMKTS:
LKNCY). But, while Luckin stock has more than doubled in the past month, don’t chase the recent rally.
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Why? Sure, its $180 million fine from the Securities and Exchange Commission (SEC) was relatively light, considering the company raised $864 million in cash during better times. But, the stigma of its past accounting fraud will continue to tarnish its long-term reputation.
That is to say, even if the company appears to be out of the woods regarding its past controversy, many will continue to look at it with a skeptical eye. With the concern of possible future fraud in the minds of most investors, it’ll be hard for Luckin stock to recover further — even if it starts to redeem itself and releases more data indicating it’s still becoming a major player in China’s growing market for coffee.