Luckin Coffee Inc. stock slumped 32% after it started trading again after more than a month, and Quo Vadis Capital thinks the stock will keep sinking.To get more news about luckin coffee earnings, you can visit shine news official website.

Luckin LK, +4.85% is being investigated for financial misconduct and has terminated its top executives, including Jenny Zhiya Qian the company’s former chief executive. The company is accused of fabricating transactions totaling about $310 million. “We continue to see the most likely outcome as a complete wipeout for equity holders,” said John Zolidis, president of Quo Vadis, in comments sent to MarketWatch.Zolidis forecasts that the company will have to start closing stores, which will do further damage. Luckin was incorporated in 2017 and by 2019 had grown to 2,370 wholly owned stores in 28 cities. “Leaving aside the fraud, the figures that are available suggest that Luckin Coffee never had a viable business model,” Zolidis said, forecasting that the store closures will come as a result of losing access to capital.

“The company grew too fast and acquired customers via promotional offers, without ever proving the economics.” And he isn’t hopeful for the locations that remain. Cash flow will be offset by the shutdowns, corporate expenses and lawsuits to come, Zolidis said. “We ascribe very remote odds to the hope that Starbucks Corp. SBUX, -0.70% or another party will swoop in to buy Luckin’s assets prior to liquidation,” he wrote.In an April note, Zolidis said Luckin’s stores were “generating significant losses” and “do not appear to produce positive same-store sales.”

He raised questions about whether the company could ever produce a profit. Adding to Luckin’s woes, the Nasdaq has sent the company a delisting notice. Luckin said the reason for the letter was “public interest concerns” given the “fabricated” transactions disclosed by the company in its annual report, and because of the company’s past failures in publicly disclosing material information. Luckin said it plans to request a hearing with the Nasdaq, with the hearing expected to occur between 30 to 45 days after the request.