Chinanews Client Beijing April 3rd (Xie Yiguan) Rui Xing, unfortunately! The "Little Blue Cup" made himself a tragedy because of forged performance.
On April 2nd, Ruixing Coffee, endorsed by many celebrities such as Tang Wei, Zhang Zhen, and Liu Haoran, suddenly exposed that the chief operating officer and other employees forged about 2.2 billion yuan in transactions.
On the Nasdaq-listed Ruixing Coffee, the stock price plummeted 75.57% on the 2nd to close at 6.4 US dollars. It had fallen more than 80% during the intraday, triggered 8 fuses, and evaporated its market value by 4.95 billion US dollars, about 35 billion yuan.
On the 3rd, before the U.S. stock market, Ruixing Coffee once fell 25%, but it opened up more than 10%. However, the market continued to fall. As of press time, Ruixing Coffee fell more than 12%, and the market value was less than 1.5 billion US dollars. Previously, Ruixing Coffee had the highest market value of nearly 13 billion US dollars.
As of press time, Ruixing Coffee's intraday chart.
According to Chen Xin, a professor of accounting at Shanghai Jiaotong University's Shanghai Advanced Institute of Finance, according to the closing price of US $ 6.4 on April 2, Ruixing Coffee has a market value of US $ 1.611 billion and a market-to-book ratio of more than 11 times. The stock price of Ruixing Coffee is far from fully reflecting the impact of this event, and the stock price of Ruixing Coffee will fall sharply.
Business logic has been questioned
For more than 10 months, Ruixing Coffee, which successfully went public in the United States, has a lot of scenery.
On May 17, 2019, only 18 months of "Little Blue Cup" (a netizen's nickname for Ruixing Coffee) was born, with 2370 stores, 16.8 million customers, sales of more than 100 million cups, and a loss of about 2.2 billion The listing of the company's results set the fastest record in the history of Nasdaq from birth to listing.
After the listing, Ruixing Coffee has developed rapidly. As of the end of 2019, the number of directly operated stores has reached 4,507.
As an internal incubation project of UCAR, Ruixing Coffee announced its independence on November 8, 2017, and officially entered the market with capital. Led by Lu Zhengyao, CEO of China UCAR, about 1 billion yuan in angel round financing, Qiano Ya, COO of China UCAR, became the head of Ruixing Coffee as the founder and CEO.
From the moment Ruixing Coffee was born, it had its own Internet genes, and used Internet tactics such as burn-in subsidies to hold high, to siege the city, and face giants such as Starbucks.
The picture shows Ruixing Coffee. Photo by Wang Shanshan
However, the outside world has questioned the rapid expansion strategy, business logic and profitability of Ruixing Coffee. From the moment it was born, it has never stopped.
In August 2019, Zhang Wei, Chairman of Cornerstone Capital, spotted the spotlight. Ruixing Coffee is essentially a traditional coffee / beverage company. The key to its success is its traditional ability to operate coffee shops.
"Riching Coffee and Starbucks are differentiated from each other, but it is still a chain coffee shop model. Its business model does not exist to break through a certain threshold, it can defeat competitors and build a long-term moat." Dongxing Securities believes that Ruixing Coffee's model is not suitable for expansion using expensive money burning strategies, and the long-term value brought by burning money is not great.
Why does Ruixing "explode " ?
Ruixing Coffee was questioned, the worst of which occurred on January 31.
On the same day, Muddy Waters released a 89-page anonymous short report on Ruixing, stating that in the third and fourth quarters of 2019, the daily sales of each store were exaggerated by at least 69% and 88%, respectively. Ruixing increased the net selling price of each item by at least 1.23 yuan or 12.3%. At the same time, advertising spending in the third quarter of 2019 was overstated by more than 150%.
Although Rui Xing denied the allegations, he also laid a foreshadowing for this "self-explosion."
After Muddy Waters released the report, several law firms in the United States have filed a class action lawsuit against Ruixing Coffee, accusing Ruixing of making false and misleading statements in violation of US securities laws. The class action lawsuit has been filed in the Southern District Court of New York on February 13.
"It was Ernst & Young that promoted Rui Xing to disclose the fraud." According to the latest report by First Financial, a senior person close to Ernst & Young Huaming (hereinafter referred to as Ernst & Young) said, "At the beginning of the year, the muddy water short report caused Ernst & Young to be alert , Ernst & Young assigned a strong anti-fraud team to intervene, discovered the facts of the fraud, and asked Rui Xing to start an internal investigation and urge the company to publish the investigation results as soon as possible in accordance with US regulations. "
The picture shows the scene in the store of Shanghai Huacheng Carnival Ruixing Coffee Shop on April 3. Photo by Yin Liqin
"Look now, I guess the beginning of the story." Some netizens said.
According to the announcement of Ruixing Coffee on the 2nd, starting from the second quarter of 2019, the company's chief operating officer and several employees who reported to him have engaged in misconduct, including fabrication of certain transactions. The company is assessing the overall financial impact of misconduct on its financial statements.
A preliminary investigation by its independent special committee showed that total sales related to false transactions from the second quarter of 2019 to the fourth quarter of 2019 were approximately RMB 2.2 billion. During this period, certain costs and expenses have also inflated significantly due to fake transactions.
Rui Xing's fraud and "Divine Department"
On April 3, the Hong Kong stock Shenzhou Car Rental, which is a major shareholder of Ruixing Coffee, fell 3.49% at the beginning of the trading session. During the session, it dived sharply and fell more than 70%, hitting a record low. The market value once fell below HK $ 2.8 billion, compared with 2 It has shrunk by more than 6 billion Hong Kong dollars.
Subsequently, China Car Rental announced the suspension of its shares pending the release of a clarification announcement that could constitute inside information. Before the suspension of China Car Rental, the stock price fell 54.42%. Its major shareholder, Lu Zhengyao, is also a major shareholder of Ruixing Coffee.
"The major shareholders of the two companies (Shenzhou Car Rental and Ruixing Coffee) are the same person, and the market is worried that there is also the possibility of financial fraud in Shenzhou Car Rental." Yan Zhaojun, a strategic analyst at Zhongtai International believes that in addition, Ruixing Coffee has the possibility to face Huge claims, investors may be afraid that major shareholders will sell China car rental stocks to cash out.
On the same day, the share price of NUSU, a new third board company, also plunged 21.75%.
According to the data of Tianyan Inspection, Lu Zhengyao, the founder, chairman and chief executive officer of Shenzhou Car Rental Co., Ltd. At the same time, Lu Zhengyao is also the legal representative and shareholder of China UCAR, Chairman of Beijing Baowo Automobile Co., Ltd. and Chairman of Ruixing.
However, in the face of the collapse of Ruixing Coffee and the "Divine Department", Lu Zhengyao was quite optimistic. According to reports, Lu Zhengyao wrote in a circle of friends, "Today is full of vitality! Come on, little friends!"
Screenshot of Lu Zhengyao's circle of friends.
"Service abnormal", Ruixing coffee app crashed
Curious netizens watched lively, but savvy netizens were busy placing orders.
On the 3rd, many netizens reported that the Ruixing Coffee app and applet crashed, showing "The system is busy, please try again later" or "The service is abnormal." The reporter logged in to the Ruixing Coffee APP to view, it showed that the positioning failed, and then the "Service Exception" interface popped up.
Ruixing Coffee's official Weibo announcement at 13:37 on the 3rd said that "the APP crashed at noon. The programmer's little brother is in urgent repair."
"Maybe there are too many people using coupons." Some netizens analyzed that on the 2nd Ruixing admitted that the data was falsified by 2.2 billion yuan. On the 3rd, many users chose to purchase Ruixing coffee to consume the balance or coupons, resulting in line congestion.
On April 3, at the Dahua Tiger City Carnival Ruixing Coffee Shop in Shanghai, citizens waited for the coffee they had purchased. Photo by Yin Liqin
The reporter noticed that as early as the evening of the 2nd, Beijing time, after the exposure of the Ruixing coffee counterfeit incident, many netizens left messages on Weibo: "Will it fail?" "I still have a lot of coupons that are useless."
Not only the online Ruixing Coffee APP service was abnormal, but some offline stores of Ruixing Coffee also had an exception on April 3. Many customers rushed to the store to hear the news. At Shanghai Jiuhai Parkson Ruixing Coffee Store, many citizens are waiting in line for coffee that has already been purchased. Staff revealed that it takes at least half an hour to place an order on the spot.
China Securities Regulatory Commission Says Verification
On April 3, the China Securities Regulatory Commission issued a statement stating that the China Securities Regulatory Commission is highly concerned about the financial fraud of Luckin Coffee Inc. and strongly condemns the company's financial fraud.
Ruixing Coffee is registered in the Cayman Islands, issuance of securities registered by overseas regulators and listing on the NASDAQ stock market in the United States.
The China Securities Regulatory Commission stated that no matter where the company is listed, listed companies should strictly abide by the relevant market laws and rules, and perform their information disclosure obligations truthfully, accurately and completely. The China Securities Regulatory Commission will verify relevant situations in accordance with relevant arrangements of international securities regulatory cooperation, resolutely crack down on securities fraud, and effectively protect investors' rights and interests.
Liu An, a postdoc in theoretical economics, told reporters that the newly amended securities law enumerates two conditions for the CSRC's extraterritorial jurisdiction, disrupting the order of the domestic securities market or causing losses to domestic investors. Ruixing is more likely to apply the latter.
The picture shows a corner of Ruixing Coffee Store. Photo by Wang Shanshan
"If domestic investors invest in Ruixing stocks after March 1, and Ruixing's alleged financial fraud continues after March 1, it is worth considering domestic lawsuits, but there are cases where the judgment results are recognized and enforced outside the territory. Question. Because Ruixing is an overseas company. "
"The beginning of the story has been written, and I hope I didn't guess the final outcome." Said a netizen.
Ruixing's fate will be bankruptcy liquidation?
In the first three quarters of 2019, Ruixing Coffee's main business revenue was 2.929 billion yuan. Now the scale of counterfeiting of 2.2 billion yuan has approached its total revenue in the first three quarters of last year.
"Among the 2.9 billion yuan in operating income, 2.2 billion yuan is suspected of forgery. Now it seems that the withdrawal of Ruixing Coffee should only be a matter of time. Whether it is the US capital market or the capital market of any other country, it will no longer be Any opportunity for such a bad company. "Pei Pei, an analyst at Guojin Securities.
"Reference to the 2001 US Enron scandal case, if the facts of the fraud are true, the company will first be subject to the SEC's sky-high regulatory fines, and it will be difficult to avoid delisting from the exchange." Counterfeiting may be more of a helpless move, and it may not have much practical significance for whether it can avoid bankruptcy and liquidation.
"Riching coffee is systematic and the whole process of fraud (eventually to be determined by the facts) is unlikely to be done by individual management personnel." This is less likely to be fully controlled by others.
He believes that the management is more likely to participate in fraudulently under the direction of the actual controller, and that the investor (the actual controller) is more likely to bear corresponding legal liabilities, which ultimately depends on the factual identification of the false statement. "Accounting firms, investment banks and other intermediaries, if there is evidence to prove conspiracy against Rui Xing's suspected fraudulent behavior, will inevitably bear legal responsibility."
Lu Zhengyao once said that a thick bubble floated on the sharing economy. He believes that he can remove the bubbles, but these bubbles are now lying on the account of Ruixing Coffee.
Perhaps Ruixing Coffee is a "capital game" from the beginning to the end. Only customers are thinking about the unused coupons in their hands. I hope Ruixing will not go bankrupt.
Did you buy Ruixing discount coffee today? (Finish)