Luckin Coffee Appoints New Chairman in Place of Founder
Shares in Luckin Coffee Inc. (OTC: LKNCY) were trading 9% higher intraday Tuesday, at $3.15 per American depositary share, on news that the company has appointed a new chairman and chief executive officer.
The move to fill the empty CEO position followed a slew of discharges at Luckin in a major post-fraud shakeup. Former CEO, Jenny Zhiya Qian, as well as chief operating officer Jian Liu were given the boot in May. Most recently, chairman and founder, Charles Zhengyao Lu, had his seat taken out from under him by company shareholders.
The new chairman and CEO, Jinyi Guo, was a director and former acting CEO of Luckin, according to Bloomberg. In addition, four new independent directors joined the board after the leave of three former directors. Reportedly, two of the new appointees were nominated by former chairman Lu, which, The Wall Street Journal wrote, could signal the continued presence of the founder at the company.
Luckin Coffee, China's major coffee chain and Starbucks challenger, was delisted from the Nasdaq after just one year in trading. It now continues to trade over-the-counter. The company has confirmed that it overstated sales for the period from April 2019 and the year-end by 2.12 billion yuan, while costs and expenses were inflated by 1.34 billion yuan.
After a monthlong trading halt during the investigation and a brief comeback to Wall Street at a stock level about 95% of its value in January 2019, Luckin decided not to appeal Nasdaq's decision to delist the company. It is now, however, fighting for investors' trust and a new future.
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