NEW YORK, April 01, 2020 (GLOBE NEWSWIRE) -- Pomerantz LLP announces that a class action lawsuit has been filed against Luckin Coffee Inc. (“Luckin” or the “Company”) (NASDAQ: LK) and certain of its officers. The class action, filed in United States District Court for the Southern District of New York, and indexed under 20-cv-01293, is on behalf of a class consisting of all persons and entities other than Defendants who purchased or otherwise acquired Luckin securities between November 13, 2019 and January 31, 2020, both dates inclusive (the “Class Period”), seeking to recover damages caused by Defendants’ violations of the federal securities laws and to pursue remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder, against the Company and certain of its top officials.
Luckin engages in the retail sale of freshly brewed drinks, and pre-made food and beverage items in China, offering freshly brewed drinks, including freshly brewed coffee and non-coffee drinks, and food and beverage items, such as light meals. The Company operates pick-up stores, relax stores, and delivery kitchens under the Luckin brand, as well as Luckin mobile app, Weixin mini-program, and other third-party platforms that cover the customer purchase process.
The Complaint alleges that throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operational and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) certain of Luckin’s financial performance metrics, including per-store per-day sales, net selling price per item, advertising expenses, and revenue contribution from “other products” were inflated; (ii) Luckin’s financial results thus overstated the Company’s financial health and were consequently unreliable; and (iii) as a result, the Company’s public statements were materially false and misleading at all relevant times.
On January 31, 2020, Muddy Waters Research published an anonymous report alleging that Luckin had fabricated certain of the Company’s financial performance metrics, beginning in the third quarter of 2019 (“3Q19”) (the “Muddy Waters Report”). The Muddy Waters Report purported to cite “smoking gun evidence,” including, inter alia, thousands of hours of store video, thousands of customer receipts, and diligent monitoring of the Company’s mobile application metrics, which allegedly showed that, since 3Q19, Luckin had inflated its per-store per-day sales figures, its net selling price per item, its advertising expenses, and its revenue contribution from “other products.”
On this news, Luckin’s American depositary share (“ADS”) price fell $3.91 per share, or 10.74%, to close at $32.49 per share on January 31, 2020.
As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of Luckin’ securities, Plaintiff and other Class members have suffered significant losses and damages.