Investor loses his entire life savings on one insanely risky position
A Reddit user shared a screenshot on Wednesday revealing their 95% loss on the Chinese coffee chain’s stock. The 28-year-old European fitness coach was intrigued by Luckin’s 300% gain from November to January. After putting more than 235,000 euros ($264,000) into the company’s shares, disaster struck.
Luckin shares nosedived 80% on April 2 after an internal investigation found the company’s chief operating officer fabricated sales totaling 2.2 billion yuan ($310 million) throughout 2019. The coffee chain warned investors that past guidance and earnings releases were no longer reliable.
The situation worsened days later when trading of Luckin stock was halted on the Nasdaq exchange. The stock sat at $4.39 for more than a month. The company received a delisting notice from Nasdaq on May 19, and when trading resumed the following day, shares cratered as much as 45%.
“I didn’t know they could cheat on balance sheet … and that a company can just fail in 3 months. It was before corona, lockdown and fraud, nobody knew back then. It went from 17 to 51 in 2 months from Nov to Jan. Could have just kept going instead of explode.”
“I do really believe everything in life happens for a reason. Is a painful lesson but I learned it the hard way and it will help me through my whole life.”