Chinese stocks have been under pressure in recent months as U.S. authorities look to tighten their reporting requirements with plans to delist those failing to comply. As a Chinese company with a track record of inaccurate reporting, Luckin Coffee (OTC:LKNC.Y) is definitely in the crosshairs of this new push. But these regulatory challenges don't overshadow the stock's bull thesis. Let's dig deeper.
Luckin Coffee was arguably the impetus for U.S. authorities to clamp down on U.S.-listed Chinese stocks. Starting in 2019, the company falsified around $300 million worth of retail sales, leading to multiple lawsuits, a C-suite reshuffle, and calls for more regulation of Chinese equities.
In 2020, Congress passed the Holding Foreign Companies Accountable Act (HFCAA), designed to open Chinese companies to more comprehensive U.S. audits.
Source Fool.com