Looking back on the misconduct of Luckin Coffee (Mizuki) - Is the real bad guy only COO? | Bridge (Bridge) Technology & Startup Information

Luckin Coffee (Mizuyuki) acknowledged the company's sparkling flushing.Why did you fall into this situation?Let's look at the details.

In response to this case, Luckin Coffee has announced the official opinion as follows.

In other words, the company has made a large amount of fraud in terms of profit, which is about half of the second, third and fourth quarter sales in 2019.

However, there are other points to look at in the company's view.That is the significant increase in "expenses and other expenses".The anonymous report released by Muddy Waters, which specializes in short selling, may be useful in understanding the above sentences.The report pointed out that the company was conducting an advertising expenses and a coffee machine procurement at a significantly higher market price.This suggests that the company's management gave priority to private interests.

Given that this management system was continuing, it would be highly possible that the fraudulent acts revealed this time are a corner of the iceberg.

It is said that the company's COO LIU JIAN (Liu Sword) was at the center of misconduct.However, the prospectus before the stock opened has shown that he has no stock.Of course, it has a stop option, but it should not be motivated to sacrifice your career.

Meanwhile, the chairman of the company Lu Zhengyao (Rikumasa Rikumasa) and Qian Zhiya (Zhiya), the CEO, are different.The catalyst has a 30.53%of Zhengyao, 19.6%, and 12.4%of the investment funds operated by Lu's sister.

From November to January 2019, the company's share price rose 160 % was due to its strong performance in the third quarter, which was much better than expected.Of course, January overlaps when the company was listed for additional capital.

Looking at the prospectus at the time of listing, it has been found that the above three companies have cached shares using all methods, such as stock demands.Simply put, Lu has acquired about $ 500 million in a means of buying a loan with stocks as collateral.Without fraud, it would not have been possible to borrow a large amount of money.

Luckin Coffee had a difficult task, even if the company's illegal numbers were based on facts.The following is a case study of Harvard Business School style.

Rents are the highest expenditures in operating coffee chains in China.In other words, it can be said that the company, which operates a store specializing in take -out, has been able to keep expenditures as much as possible (compared to the third place -provided type).

However, in a sense, it was too dependent on Blitz Scaling rather than physical assets.The term originated in Silicon Valley, which refers to giving priority to speed over efficiency to acquire large -scale markets.

In order to manipulate Blitz Scaling, it must have a large -scale market, have a large and zero margin cost distribution, and also use the network effect.Although it was a relatively easy means for SNS and platform companies, it was a challenge for coffee stores.

In the case of Luckin Coffee, the rapid expansion and value -providing value outside of China have led to shaking the company's balance sheet.

Due to the sluggish stock price, the company will seem to have continued to go bankrupt.However, the company still has abundant cache.On the other hand, the company's ambition as a company may have to change the size from "Venti" to "SHORT".If management who has made fraudulent acts to change the mind and continue to operate, the number of stores will be rapidly reduced as the company has rapidly expanded the number of stores.

Also, it cannot be said that it can be recovered just by reducing actual stores.The company's plans to expand the vending machine throughout China should be canceled.Of course, the cost of stores can be reduced, but products that can be handled will be narrowed.If you can sell high profit margins, such as coffee, milk tea, and juice, you should promote sales at actual stores.

It is also important to promote the overall number of customers.For this reason, it is necessary to carry out the distribution of urban and coupons where the office is located mainly.

It is known that investors are likely to have been involved in fraudulent acts without being disclosed.In other words, while the two companies are at the center of Corporate Governance, the company's resurrection play does not start.If you are seriously aiming for a coffee company in China, you are inevitable.

* This article is an abstract of the affiliated Technode article.

[Via Technode] @TechNodechina

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