Could This $16 Stock Have a 200% Upside?
Two years ago, Luckin Coffee (OTC: LKNC.Y) was one of the hottest growth stocks on the market. Shares peaked at an all-time high of $50 in January 2020 just months after its IPO at $17 in May 2019. But an accounting scandal and C-suite drama have sent the stock roughly back to where it started. Let's explore why Luckin Coffee might be on track to regain its old valuation over the long term.
Following an internal investigation in 2020, Luckin Coffee admitted that its former management fabricated $310 million worth of 2019 sales. The news led to a series of fines and the stock's delisting from the Nasdaq stock exchange. By its lowest point in June 2020, shares had fallen by a stunning 97% to just $1.38 as investors ran for the exits. To rectify the situation, Luckin Coffee brought on new management and filed for Chapter 15 bankruptcy protection to restructure its debt without impacting business operations.
In April 2022, the company successfully emerged from all bankruptcy proceedings. And with a share price of $16.5, its market cap of $4.3 billion is now roughly the same as when it first hit the market back in 2019 at $4.2 billion. The difference is that Luckin Coffee is a far better business now and arguably better than when it peaked at $50 per share.
Source Fool.com
