• A Sliding Share Price Has Us Looking At CarGurus, Inc.'s (NASDAQ:CARG) P/E Ratio
    Simply Wall St.

    A Sliding Share Price Has Us Looking At CarGurus, Inc.'s (NASDAQ:CARG) P/E Ratio

    Unfortunately for some shareholders, the CarGurus (NASDAQ:CARG) share price has dived 31% in the last thirty days. And...

  • Luckin Coffee Scandal Deals New Blow to Corporate China
    Bloomberg

    Luckin Coffee Scandal Deals New Blow to Corporate China

    (Bloomberg) -- The fallout from Luckin Coffee Inc.’s accounting scandal is spreading far beyond the high-flying Starbucks challenger, with renewed concerns about Chinese corporate governance dragging down stocks across industries and threatening to bring a halt to the country’s overseas initial public offerings.The Xiamen-based coffee chain said on Thursday that its chief operating officer and some underlings may have fabricated billions of yuan in sales, upending what was supposed to be one of China’s best growth stories. Luckin Coffee shares plunged as much as 81% in U.S. trading and CAR Inc., a rental company founded by Luckin Coffee’s chairman, sank 54% in Hong Kong. Popular short-selling targets including Anta Sports Products Ltd. also slumped.Lone Pine Capital, one of Luckin Coffee’s top holders, no longer reports a stake in the company, according to a filing. It held a 10.7% stake as of Jan. 9, according to data compiled by Bloomberg.The revelations revived doubts about financial reporting that have for years dogged Chinese stocks listed in the U.S. and Hong Kong, two exchanges frequently picked by company founders to raise new funds. While China recently changed regulations to punish instances of financial fraud onshore, the penalties remain negligible. Just last year, one of China’s largest listed drug makers said it overstated cash holdings by more than $4.3 billion.“After the Luckin incident, investors will be more careful when investing in Chinese companies that have a short founding history and rely on huge leverage to expand,” said Jackson Wong, Hong Kong-based asset management director for Amber Hill Capital Ltd.The news is likely to put at least a temporary freeze on new U.S. listings by Chinese companies, according to four investment bankers who asked not to be identified because they aren’t authorized to speak to media. One of the bankers said U.S. investor appetite for Chinese shares already had waned amid a string of disappointing deals and heightened geopolitical tensions between Washington and Beijing.Those concerns come on top of a general flight from risk because of the coronavirus pandemic, which has caused IPO volumes globally to plunge in recent weeks.“It will inevitably affect the investors’ confidence and market momentum on other U.S.-listed China stocks,” said Steven Leung, executive director at UOB Kay Hian in Hong Kong. “It may even affect the Chinese companies’ U.S. IPO pipeline because investors would start to question their accountability.”Read more: Global Banks, Wary of Some China U.S. IPOs, Walk Away From DealsLouis Tse, Hong Kong-based managing director at VC Asset Management Ltd., disagreed, saying all IPOs have to follow the same procedures and meet the same regulatory requirements.“I don’t think this will tarnish the names of incoming companies in Nasdaq,” he said. “Psychologically it would have an impact, but it’s not necessarily on a Chinese company.”Outside the Luckin Coffee corporate family, the sell-off on Friday hit companies previously called out by speculators for their financial reporting -- including Anta Sports Products Ltd., Xtep International Holdings Ltd. and 361 Degrees International Ltd. China International Capital Corp., one of the lead managers of Luckin Coffee’s IPO last year, slid as much as 5.4% in Hong Kong.Luckin Coffee suspended Chief Operating Officer Jian Liu and others while its board investigates, and it said investors shouldn’t rely on previous financial statements for the nine months ended Sept. 30. The transactions in question occurred last year and totaled about 2.2 billion yuan ($310 million), according to its filing.If true, the fabricated sales figure could represent a significant portion of the company’s total revenue. Luckin, which has only reported financial data for the second and third quarter of last year after its May public offering, was seen reporting 5.15 billion yuan of revenue for the full year, according to the average of estimates compiled by Bloomberg.“Certain costs and expenses were also substantially inflated by fabricated transactions during this period,” Luckin said, adding that the board hasn’t verified the fabricated sales figures.Thursday’s share decline erased what had been a 54% gain since the company went public last year.The coffee chain, founded in 2017, operated about 4,500 stores by the end of 2019 in China. Chairman Lu Zhengyao and Chief Executive Officer Qian Zhiya employed a strategy they used with CAR Inc. more than a decade ago: burning money from investors to quickly grab market share from rivals. That strategy has been successful in winning over investors.Luckin Coffee planned to reach 10,000 locations by the end of next year in a market valued at $5.8 billion. Coffee consumption is only in its initial stages in China, and Luckin Coffee was trying to overtake Starbucks by opening more stores in two years than the industry giant has in two decades. Luckin pulled in Chinese consumers by offering generous discounts.Trouble emerged earlier this year, however. The stock plunged after Muddy Waters Capital tweeted Jan. 31 that it had a short position after receiving what it called a “credible,” unattributed 89-page report that alleged accounting issues with the chain and a broken business model. Luckin Coffee denied the allegations.The company raised $865 million from a share sale and a convertible bond offering in January, according to people with knowledge of the matter. It also raised $645 million in its U.S. IPO.“Luckin denied short sellers’ reports earlier, and then it admitted wrongdoing,” said Kenny Wen, a Hong Kong-based wealth management strategist at Everbright Sun Hung Kai Co. “Lots of lawsuits will emerge.”(Updates with holding data in third paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Bloomberg

    Cinco de Mayo Could Lack Corona if Mexico Shutters Breweries

    (Bloomberg) -- It may be tough to find enough Corona beer for Cinco de Mayo house parties - if that will even be a thing in 2020.Mexico’s Grupo Modelo, the maker of Corona beer that’s owned by Anheuser-Bush InBev, said late Thursday that it had started shutting down production at its breweries in Mexico and would stop sales entirely by Sunday in order to comply with the government’s coronavirus emergency protocol, which didn’t identify beer production as essential.On Friday, President Andres Manuel Lopez Obrador said his government was reviewing which types of factories would be considered essential, and said the final decision would be made by health officials. Modelo said it would guarantee beer supply with 75% of its workers operating from their homes, if the government gives it the go-ahead to keep running.Mexico declared a national health emergency on Monday, but its March 31 notice calling for a halt to non-essential activities for a month has sown uncertainty. The government’s ruling on whether it may allow an exception for beer and alcohol production could weigh on global brewers and spirits producers, Credit Suisse analyst Kaumil Gajrawala said in an April 2 note.Constellation Brands sank this week on concerns it would have to shutter its breweries but on Friday the company suggested Cinco de Mayo parties in the U.S. would be safe.Chief executive officer Bill Newlands said its Mexico plants are still operating and that the company had 70 days of inventory that will guarantee no disruption with retailers. “We expect to have no disruption in our ability to produce product and deliver it to retail,” Newlands said in a conference call with analysts.Constellation makes Corona and Modelo brands for export to the United States, while Grupo Modelo produces the beers for the rest of the world. Heineken, which makes Mexican beers Dos Equis and Tecate, told Credit Suisse it was preparing to suspend production, but that it was making a case to the government that barley growers would be hit.Heineken shares shed around 7% the past three days, Constellation was down nearly 8% and AB InBev slipped about 2%.Citigroup analyst Simon Hales said in a note that Mexico’s market is ABInBev’s 4th biggest and Heineken’s largest global market. Bloomberg Intelligence analyst Kenneth Shea said Constellation sources nearly all of its beer from Mexico.“A potential extended beer plant shutdown in Mexico would be devastating to the company, as its beer sales account for about two-thirds of it sales,” Shea said.Since Wednesday, videos circulated in social media of lines of cars lined up at drive thru beer stores in Mexico’s north. Another showed lines of shoppers with carts filled to the brim with cases of Corona beer. There were rumors that states would impose dry laws, as is done during elections in Mexico. President Lopez Obrador’s home state of Tabasco banned alcohol sales this week.Lopez Obrador said on Friday that local governments could make their own decisions, but he pointed out that “panic beer buying” was creating crowds that could risk further contagion.Tequila makers such as Jose Cuervo maker Becle SAB and Don Julio owner Diageo Plc look to be safe after the state of Jalisco deemed their production essential, citing farm workers that depend on them.Meanwhile, beer companies are lobbying the Mexican government. Modelo said 800,000 small stores depend on beer sales for 40% of revenues, while 15,000 farm families benefit from barley crops.Lopez Obrador angered the country’s business leaders late last month after he backed a local referendum to deny permits to a partly-built Constellation plant in the Mexican border town of Mexicali. The president met with company executives this week and Newlands said the company had held productive talks that will lead to a favorable solution, but he declined to share details.(Updates with Constellation CEO comments in paragraph 6 and 15 and analyst comment in paragraphs 9-10)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Constellation Brands says Mexico breweries still running amid coronavirus outbreak
    Reuters

    Constellation Brands says Mexico breweries still running amid coronavirus outbreak

    AB InBev-owned Grupo Modelo and Dutch brewer Heineken recently suspended their Mexican operations after the country declared a health emergency and ordered the suspension of non-essential activities. Constellation Chief Executive Officer Bill Newlands said the company was not going against government recommendations. The brewer's Corona and Modelo beers have been a huge hit with consumers, especially among the Hispanic population, helping it gain market share in the United States.

  • GBP/USD Weekly Price Forecast – British Pound Pulls Back for the Week
    FX Empire

    GBP/USD Weekly Price Forecast – British Pound Pulls Back for the Week

    The British pound continues to see a lot of resistance in the 1.25 region, an area that is a large, round, psychologically significant figure and of course the 61.8% Fibonacci retracement.

  • GBP/USD Price Forecast – British Pound Falls Into the Weekend
    FX Empire

    GBP/USD Price Forecast – British Pound Falls Into the Weekend

    The British pound fell into the weekend, showing signs of overall weakness. After all, the jobs number was horrible in the United States, losing over 700,000 jobs, getting people to run for shelter.

  • GBP/JPY Price Forecast – British Pound Pulls Back Slightly Against Japanese Yen
    FX Empire

    GBP/JPY Price Forecast – British Pound Pulls Back Slightly Against Japanese Yen

    The British pound initially tried to rally against the Japanese yen on Friday but has pulled back just a bit as we continue to see consolidation. At this point, the market is likely to have to make some type of significant move.

  • Constellation Brands (STZ) Tops Q4 Earnings & Sales Estimates
    Zacks

    Constellation Brands (STZ) Tops Q4 Earnings & Sales Estimates

    Constellation Brands (STZ) reports strong fourth-quarter fiscal 2020 results, driven by continued strength in the beer business and gains in the wine & spirits segment.

  • Company News for Apr 3, 2020
    Zacks

    Company News for Apr 3, 2020

    Companies In The News Are: NEPT, BMRA, LK, WBA

  • Constellation Brands (STZ) Q4 Earnings and Revenues Top Estimates
    Zacks

    Constellation Brands (STZ) Q4 Earnings and Revenues Top Estimates

    Constellation Brands (STZ) delivered earnings and revenue surprises of 27.16% and 3.50%, respectively, for the quarter ended February 2020. Do the numbers hold clues to what lies ahead for the stock?

  • GBP/USD Remains Within a Range Despite Notable Dollar Recovery
    FX Empire

    GBP/USD Remains Within a Range Despite Notable Dollar Recovery

    The British pound has been resilient this week and has held within a tight range relative to price action in prior weeks despite the dollar regaining upward traction.

  • What to Watch: Record EU PMI slump, markets fall, Primark pay cuts
    Yahoo Finance UK

    What to Watch: Record EU PMI slump, markets fall, Primark pay cuts

    A daily overview of the top business, market, and economic stories to watch in the UK, Europe, and abroad.

  • China probes alleged fraud at Luckin Coffee, banks review IPO work
    Reuters

    China probes alleged fraud at Luckin Coffee, banks review IPO work

    China's securities regulator said on Friday it would investigate claims of fraud at Luckin Coffee Inc and sources said some of the banks involved in the Chinese chain's successful U.S. IPO last year were reviewing their work in the listing. Shares of Luckin, which competes in China with Starbucks Corp , sank as much as 81% on Thursday in New York after it announced an internal investigation had shown its chief operating officer and other employees fabricated sales deals. The company said it had suspended COO Jian Liu and employees reporting to him following initial recommendations from a special committee that was appointed to investigate issues in its financial statements for the fiscal year ended Dec. 31, 2019.

  • Pound slides as UK economy 'sucked into black hole' by coronavirus
    Yahoo Finance UK

    Pound slides as UK economy 'sucked into black hole' by coronavirus

    Fears grow of one of the worst recessions in modern history, with almost a million people claiming universal credit in just a fortnight.

  • Coronavirus: Ryanair expects €1bn profits despite 48% collapse in March traffic
    Yahoo Finance UK

    Coronavirus: Ryanair expects €1bn profits despite 48% collapse in March traffic

    The Irish budget airline said it would meet expectations for profit over the past year, but flight numbers are now at just 1% of normal levels.

  • Fears government can't stop 'meteor hitting planet business'
    Yahoo Finance UK

    Fears government can't stop 'meteor hitting planet business'

    Despite billions of pound of stimulus, the UK is facing a steep contraction in its economy.

  • GBP/USD Daily Forecast – Consolidation Around 1.2400 Continues
    FX Empire

    GBP/USD Daily Forecast – Consolidation Around 1.2400 Continues

    The pair is in the consolidation phase after the major move that happened last week.

  • Bloomberg

    Investors Wake Up and Smell the Luckin Coffee

    (Bloomberg Opinion) -- Investors in Luckin Coffee Inc., China’s upstart rival to Starbucks Corp., should have seen this coming.Luckin shares plunged as much as 81% in U.S. trading Thursday after the country’s largest coffee chain said employees fabricated much of its sales last year. Car Inc., which shares a chairman with Luckin, tumbled as much as 72% in Hong Kong on Friday morning before trading was halted.Skepticism swirled around the sustainability of Luckin’s business model well before its Nasdaq initial public offering last May. Luckin’s success relied heavily on generous discounts funded by investor money, as I wrote in December 2018. The company spent 152 yuan ($21.45) for every 100 yuan it made selling coffee, my colleague Tim Culpan noted in May. In February, after short seller Muddy Waters Capital said it had received an 89-page anonymous report alleging that Luckin fabricated financial and operating numbers, we again noted its reliance on near-permanent discounts.Investors in the chain include Singapore’s sovereign wealth fund, GIC Pte, U.S. fund manager BlackRock Inc. and crop trading giant Louis Dreyfus Co., as well as a slew of venture capital firms. Early backers included Centurium Capital, a private equity fund founded by the former China head of Warburg Pincus.Luckin’s turbo-charged growth and technology sheen were central to the investor buzz it created. Having opened its first store in Beijing only three years ago, the company had 4,500 domestic locations by the end of last year, outstripping Starbucks’ 4,300 Chinese stores.The company described itself as a coffee “network” in its IPO document and prided itself on an app that offers a “100% cashier-less environment.” That slapped a new-economy aura on a largely humdrum and routine business — not unlike the office-sharing company WeWork, another hot unicorn that subsequently fell from grace.Luckin said Chief Operating Officer Jian Liu and employees reporting to him engaged in misconduct and it is investigating. The aggregate sales amount associated with the fabricated transactions totaled about 2.2 billion yuan. Certain costs and expenses were also substantially inflated, according to the filing. Liu and others have been suspended and investors shouldn’t rely on previous financial statements for the nine months ended Sept. 30, the company said. Luckin reported net revenue of 2.9 billion yuan for the nine months through September.It’s a moment of truth and a wake-up call for investors who pile into Chinese startups that show meteoric growth rates. That’s a message that few appear to have taken to heart after the spectacular boom and bust of bike-sharing companies such as Ofo. WeWork’s failed attempt to list taught U.S. investors that you can’t burn cash forever. Luckin could deliver a similar lesson for China.Luckin’s management will need a long time to re-establish investor trust, if it can do so at all. The market for Chinese IPOs in the U.S. is also sure to suffer. After all, it’s far from the first time that an overseas-listed Chinese company has been embroiled in allegations of accounting manipulation. Luckin at least can be thankful that it raised $778 million selling shares and convertible bonds earlier this year, giving it some leeway to ride out the storm. For investors, the moral is an old one: If something looks too good to be true, it probably is.  This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Nisha Gopalan is a Bloomberg Opinion columnist covering deals and banking. She previously worked for the Wall Street Journal and Dow Jones as an editor and a reporter.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • China’s Biggest Car Rental Firm Sinks 72% on Luckin Connection
    Bloomberg

    China’s Biggest Car Rental Firm Sinks 72% on Luckin Connection

    (Bloomberg) -- Trading in shares of China’s biggest car-rental company was suspended in Hong Kong after they tumbled as much as 72% amid concern over the firm’s ties with Luckin Coffee Inc., which is facing an accounting probe.Car Inc. last traded at HK$1.96, a slump of 54%, before the halt at 10:14 a.m. local time. Volume was more than 70 times greater than the 30-day average with less than an hour of trading. The firm’s dollar bond due 2021 plummeted 31 cents to 44.8 cents on the dollar, the most ever, according to Bloomberg-compiled pricing.The company was founded by Lu Zhengyao, the chairman of Luckin Coffee, which sank Thursday after saying its board is investigating reports that senior executives and employees fabricated transactions.“Car Inc. investors are deeply concerned about the credibility of its financial reports,” said Kenny Wen, wealth management strategist at Everbright Sun Hung Kai Co. “Now that Luckin has such a big integrity issue, people are worried that chairman Lu may have planted similar culture in Car Inc. The selling of its shares is a vote of mistrust on management.”Wang Tao, a Car Inc. spokesman, declined to comment.Luckin, a Chinese coffee chain, plunged as much as 81% in U.S. trading on Thursday. The company, a key competitor to Starbucks Corp. in China, said Chief Operating Officer Jian Liu and employees reporting to him engaged in misconduct. Liu and others have been suspended and investors shouldn’t rely on previous financial statements for the nine months ended Sept. 30, the company said.Chairman Lu and Chief Executive Officer Qian Zhiya employed a strategy at Luckin that they used with Car Inc. more than a decade ago: burning money from investors to quickly grab market share from rivals. Luckin started trading in the U.S. less than a year ago.Car Inc. management told investors at a call this morning that Luckin and Car Inc. are two separate listed firms and are operationally independent, according to people who dialed into the call. The management also said it can repay a panda bond due April, as well as a $300 million dollar note due 2021. It aims to cut the size of its debt by 5 billion yuan ($706 million) to 6 billion yuan in 2020.Two of Car Inc.’s yuan bonds are puttable in April, Bloomberg-compiled data show. Its 5.5% note due 2022 has 300 million yuan outstanding and its 6.3% note due 2021 has 730 million yuan.Car Inc. was already struggling, before Friday’s drop. Its shares were down 19% this year, while the firm’s dollar notes were among the worst performers in an index of China high-yield bonds. Profit at Car Inc., which also sells used vehicles, fell 89% in 2019.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Investing.com

    Dollar Still in Demand, For Now

    At 3:05 AM ET (0705 GMT), the U.S. Dollar Index, which tracks the greenback against a basket of six other currencies, rose above 100 for the first time in over a week to stand at 100.460, up 0.2% on the day and up some 0.6% on the week.

  • Service Sector PMI and U.S Nonfarm Payrolls Put the EUR and USD in the Spotlight
    FX Empire

    Service Sector PMI and U.S Nonfarm Payrolls Put the EUR and USD in the Spotlight

    Nonfarm payrolls and service sector PMIs are in focus today. With the West in shutdown mode, both labor market numbers and PMIs are expected to be dire…

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