Investing Lessons From the Luckin Coffee Accounting Fraud Debacle
For investors who had bought into the growth story of Luckin Coffee (NASDAQ: LK), last week was brutal. On April 2, the high-flying growth stock plummeted nearly 80% after the company issued a press release admitting that COO Jian Liu and certain other employees had fabricated a significant amount of sales from the second quarter through the fourth quarter of 2019.
That is bad news for anyone who held Luckin stock prior to the drop. But are there a few valuable (yet expensive) lessons that could be drawn from Luckin's collapse?
You might think that there isn't much to be learned here. After all, how can you judge any stock if its numbers have been manipulated? Still, I think there are several important takeaways from the Luckin debacle that can be used to better manage risk on similar future investments. Here are four of them.
Source Fool.com
